1.

What is the effect of not replenishing the petty cash fund at year-end and not
making the appropriate adjusting entry?
Cash will be overstated, and expenses understated.
Expenses will be overstated, and cash will be understated.
The petty cash custodian should turn over the petty cash to the general cashier.
A detailed audit is necessary.

2. By preparing a proof of cash at year end, an auditor will generally not be able to
detect:
A second payment of an account payable which had already been paid in full two months earlier
An unrecorded check cashed during the month
A bank charge during the month not recorded on the books
An unrecorded deposit made at the bank at the end of the month

3. Kiting would least likely be detected by:

Preparing a four-column bank reconciliation for all major cash accounts.
Comparing customer remittance advices with recorded disbursements in the cash disbursements
journal.
Preparing a schedule of interbank transfers by using the client's records and bank statements
around year end.
Analyzing details of large cash deposits around year end.

4. Which of the following manipulations of cash transactions would overstate the cash
balance on the financial statements?
Overstatement of bank services charges
Overstatement of outstanding checks
Understatement of deposits in transit
Understatement of outstanding checks

5. An auditor suspects that a client’s cashier is misappropriating cash receipts for

personal use by lapping customer checks received in the mail. In attempting to
uncover this embezzlement scheme, the auditor most likely would compare the
Dates uncollectible accounts are authorized to be written off with the dates the write-offs are
actually recorded.
Daily cash summaries with the sums of the cash receipts journal entries
Individual bank deposit slips with the details of the monthly bank statements
Dates checks are deposited per bank statements with the dates remittance credits are recorded

6. Which of the following describes the most effective preventive control to ensure
proper handling of cash receipt transactions?
Have bank reconciliations prepared by an employee not involved with cash collections and then
have them reviewed by a supervisor
Have one employee issue a pre-numbered receipt for all cash collections; have another
employee match daily totals of pre-numbered receipts to bank deposits
Use predetermined totals (has totals) of cash receipts to control posting routines
Have the employee who receives customer mail prepare the daily bank deposit; have another
employee actually make the deposit

7. A proof of cash used by an auditor

Confirms that the client has properly separated the custody function from the recording function
with respect to cash.
Determines whether any unauthorized disbursements or unrecorded deposits were made for the
given time period.
Validates that the client’s bank did not make an error during the period being examined.
Provides that the client’s year-end balance of cash is fairly stated.

Use the following information to answer 8-9:

8. What is the adjusted balance per bank as of December 31, 2017?

P130,000
P134,000
P131,000
P135,500

9. The amount of cash shortage as of December 31, 2017 is:

P25,000
P81,000
P77,500
P59,000

Use the following information to answer 10-12:

10. The checks outstanding on July 31 amount to:

P 500
P 13,440
P 13,940
P236,150

11. The deposit in transit on July 31 amount to:

P 6,000
P10,000
P14,500
P16,000

12. The adjusted cash balance on July 31 is:

P 6,480
P 6,980
P46,110
P82,560

13. The petty cash receipt voucher is for a return of travel expense advance. What is
the petty cash shortage given the following problem?

P 400
P 500
P 900
P1,000

Use the following information to answer 14-15:

14. What amount should be reported as Cash and Cash Equivalents?
3,548,000
3,448,000
3,523,000
3,423,000

15. How much from the information above should be presented as part of liability?
Zero
200,000
2,200,000
2,225,000
Use the following information to answer questions 1 – 2:
0

1. How much is the total outstanding checks as of December 31? *

Your answer

2. What is the adjusted cash in bank balance on December 31? *

Your answer

3. How much is the total book receipts in December in the following problem?

Your answer

4. Determine the amount of Cash and Cash equivalents in the following problem