MGMT 433 EXAM 3 QUESTIONS WITH
100% CORRECT ANSWERS LATEST
VERSION 2025/2026.
Why audit cash - ANS - significant asset
- related to many transaction streams
- susceptible to fraud
Cycles related to cash - ANS - Revenue/ sales
- Expenses
- Payroll
- most transactions culminate in cash receipts or cash disbursements`
Cash equivalent - ANS original maturity < 90 days
Risks related to cash: Existence of cash (E/O) - ANS Overstatement risk
Risks related to cash: Cutoff - ANS Checks/ deposits recorded in correct period
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Risks related to cash: Accuracy - ANS Is cash classified correctly
Audit of Cash - ANS - understand the processes and controls in place
- create a lead sheet for cash accounts
- review audit program for cash
- obtain bank reconciliations from client
- use standard w/p's to test cash
Test bank reconciliation - ANS - agree the bank balance to the bank statements or
confirmation received (existence)
- agree book balance to GL
- check mathematical accuracy of client-prepared bank reconciliations
- test reconciling items
- investigate other significant reconciling items or adjustments
Testing cutoff - ANS - checks and deposits dates
- outstanding items are proper and have not been cleared
- use subsequent month bank statement
Test A/CL - ANS - are there cash equivalents that should be recorded as cash at YE
- Significant custodial credit risk over deposits
Sources of A/R - ANS -Claims against customers from sale of goods or services
- Loans to officers or employees
- Loans to subsidiaries
- Claims against various other refunds
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
100% CORRECT ANSWERS LATEST
VERSION 2025/2026.
Why audit cash - ANS - significant asset
- related to many transaction streams
- susceptible to fraud
Cycles related to cash - ANS - Revenue/ sales
- Expenses
- Payroll
- most transactions culminate in cash receipts or cash disbursements`
Cash equivalent - ANS original maturity < 90 days
Risks related to cash: Existence of cash (E/O) - ANS Overstatement risk
Risks related to cash: Cutoff - ANS Checks/ deposits recorded in correct period
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Risks related to cash: Accuracy - ANS Is cash classified correctly
Audit of Cash - ANS - understand the processes and controls in place
- create a lead sheet for cash accounts
- review audit program for cash
- obtain bank reconciliations from client
- use standard w/p's to test cash
Test bank reconciliation - ANS - agree the bank balance to the bank statements or
confirmation received (existence)
- agree book balance to GL
- check mathematical accuracy of client-prepared bank reconciliations
- test reconciling items
- investigate other significant reconciling items or adjustments
Testing cutoff - ANS - checks and deposits dates
- outstanding items are proper and have not been cleared
- use subsequent month bank statement
Test A/CL - ANS - are there cash equivalents that should be recorded as cash at YE
- Significant custodial credit risk over deposits
Sources of A/R - ANS -Claims against customers from sale of goods or services
- Loans to officers or employees
- Loans to subsidiaries
- Claims against various other refunds
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
