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

question 47

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 a 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:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers, resulting in a market balance.

Quantity

The quantity of a substance or item that is available or manufactured.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate the market price.

Government Regulation

Laws and rules established by governments to control the behavior of businesses and individuals to achieve policy objectives.