A Procedure to Test for a Cash Receipts Cutoff Error

question 30

Multiple Choice

A procedure to test for a cash receipts cutoff error is:

• A)reconciling the bank statement.
• B)performing a four-column proof-of-cash.
• C)observing the counting of cash at the balance sheet date.
• D)tracing recorded cash receipts to bank deposits on the bank statement of a different period.

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Definitions:

Annuities Due

Annuities Due refer to a series of equal payments made at the beginning of consecutive periods over a fixed length of time, often used in finance to represent contracts that require such payments.

Ordinary Annuities

Ordinary annuities are a series of equal payments made at the end of consecutive periods over a fixed length of time.

Perpetuity

A financial term referring to a security or form of investment that pays an infinite series of cash flows with no end date.

Endowment Fund

A financial asset, in the form of donations, made to non-profit organizations that uses the generated income for a specific purpose.