An Auditor Should Trace Interbank Transfers for the Last Part

question 62

Multiple Choice

An auditor should trace interbank transfers for the last part of the audit period and first part of the subsequent period to detect whether:

• A)the cash receipts journal was held open for a few days after the year-end.
• B)the last checks recorded before the year-end were actually mailed by the year-end.
• C)cash balances were overstated because of kiting.
• D)any unusual payments to or receipts from related parties occurred.

Recognize the need for interperiod tax allocation due to temporary differences.

Distinguish between temporary and permanent differences in taxable vs. financial income.

Apply the asset/liability method for income tax allocation.

Understand the implications of different revenue recognition methods for tax and financial purposes.

---

Definitions:

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without the need for prior learning.

Wagner

A reference to theories postulated by Robert A. Rescorla and Allan R. Wagner on conditioning processes, focusing on the associative strength between stimuli and responses.

Unconditioned Response

An automatic, natural response to an unconditioned stimulus that requires no learning.

Pavlov

A Russian physiologist best known for his work in classical conditioning, particularly with the conditioned response of salivation in dogs.