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

question 65

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 misstatement?

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

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Definitions:

Balance Sheet

A document presenting an organization’s assets, obligations, and equity of shareholders on a specific date.

Short-term Investments

Financial instruments and assets that are expected to be converted into cash or sold within a period of one year or less.

Liabilities

Financial obligations or debts owed by a company to external parties, which must be settled over time through the transfer of assets, provision of services, or other means.