A Practical and Effective Audit Procedure for the Detection of Lapping

question 2

Multiple Choice

A practical and effective audit procedure for the detection of lapping is:

• A)Preparing an interbank transfer schedule.
• B)Comparing recorded cash receipts in detail against items making up the bank deposit as shown on duplicate deposit slips validated by the bank.
• C)Tracing recorded cash receipts to postings in customers' ledger cards.
• D)Preparing a proof of cash.

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Definitions:

Taxpayer

An individual or entity that is obligated to make payments to municipal or governmental authorities based on income earned or property owned.

Provisional Income

It's the total income a person has, including tax-exempt interest and half of their Social Security benefits, used to determine the taxability of Social Security benefits.

Social Security Benefits

Payments made to eligible individuals from the government, intended to support retirees, disabled persons, and survivors of deceased workers.

Taxability

The condition of being subject to taxes; applicable to income, goods, services, and transactions that can be taxed.