By Preparing a Four-Column Bank Reconciliation ("Proof of Cash")for the Last

question 60

Multiple Choice

By preparing a four-column bank reconciliation ("proof of cash") for the last month of the year,an auditor will generally be able to detect:

• A)An unrecorded check written at the beginning of the month which was cashed during the period covered by the reconciliation.
• B)A cash sale which was not recorded on the books and was stolen by a bookkeeper.
• C)An embezzlement of unrecorded cash receipts on receivables before they had been deposited into the bank.
• D)A credit sale which has been recorded twice in the sales journal.

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Definitions:

Material Quantity Variance

A financial measurement that calculates the difference between the expected amount of materials and the actual amount used, affecting production costs and efficiency.

Material Price Variance

The difference between the actual cost of materials used to produce a product and the standard or expected cost.

Direct Material Variances

The difference between the actual cost of direct materials used in production and the standard cost, indicating efficiency in using materials.

Favorable Variances

Variances that occur when actual costs are less than standard or budgeted costs, or actual revenues exceed expectations, benefiting the company's financial performance.