Two Months Before Year-End, the Bookkeeper Erroneously Recorded the Receipt

question 25

Multiple Choice

Two months before year-end, the bookkeeper erroneously recorded the receipt of a long-term bank loan by a debit to cash and a credit to sales. Which of the following is the most effective procedure for detecting this type of error?

• A)Analysis of the notes payable journal.
• B)Analysis of bank confirmation information.
• C)Preparation of a year-end bank reconciliation.
• D)Preparation of a year-end bank transfer schedule.

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Definitions:

Consolidation Entry A

An accounting entry made to adjust or combine financial information from separate entities during consolidation.

Consolidation Worksheet

A tool used in the preparation of consolidated financial statements that helps in adjusting and combining the financial information of parent and subsidiary entities.

Purpose

The objective or intended outcome that an organization or plan is meant to achieve.

In-process Research and Development

The value of research and development efforts acquired through an acquisition that have not yet reached commercial viability.