When the Auditor Believes the Year-End Bank Reconciliation May Be

question 80

Multiple Choice

When the auditor believes the year-end bank reconciliation may be intentionally misstated, it is appropriate to perform extended tests of the year-end bank reconciliation. Assuming the client has an October 31 year-end, these extended tests would not include

• A) comparing all September 30 reconciling items with canceled checks and other documents in the October bank statement.
• B) comparing all canceled checks and deposit slips in the October bank statement with the October cash disbursements and receipts records.
• C) carrying out all proper procedures subsequent to the end of the year with the use of the bank cutoff statement.
• D) determining that all outstanding checks had cleared by the date of the bank cutoff statement.

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Definitions:

Work in Process

Refers to the cost of unfinished goods in the manufacturing process including labor, raw materials, and overhead costs.

Total Conversion Costs

Total conversion costs are the sum of labor and overhead expenses incurred to convert raw materials into finished goods.

Ending Work in Process

The balance of goods that are still in the production process at the end of an accounting period and have not yet been completed.

Units Started

The quantity of units that began production over a particular period in the manufacturing process.