Under Which of the Following Circumstances Would an Auditor Be

question 43

Multiple Choice

Under which of the following circumstances would an auditor be most likely to intensify an examination of a $1,000 petty cash fund maintained on an imprest basis?

• A)Reimbursement vouchers are not prenumbered.
• B)Reimbursement of the fund from the general cash account occurs twice or more each week.
• C)The custodian occasionally uses the cash fund to cash employee checks.
• D)The custodian endorses reimbursement checks.

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Definitions:

Non-normal Cash Flows

Cash flow patterns that do not fit the standard uniform or incrementally changing scenario, often impacting investment analysis.

Initial Costs

The initial expenses incurred during the setup or early stages of a project, including but not limited to setup, installation, and purchase costs.

MIRR

Modified Internal Rate of Return, a measure used to assess the profitability of an investment, accounting for the cost of capital and reinvestment of cash flows.

Terminal Value

The estimated value of a business or project at the end of a forecast period, often used in discounted cash flow analyses.