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For the most effective internal control, monthly bank statements should be received directly from the banks and reviewed by the:
The internal auditor generally is independent of other functions relating to cash.
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Which of the following internal controls most likely would reduce the risk of diversion of customer receipts by an entity’s employees?
A lockbox system is the best means of preventing fraud of cash by employees because they will never have direct access to cash receipts.
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An auditor would be most likely to identify a contingent liability by obtaining a (an):
An auditor would be most likely to identify a contingent liability by obtaining a standard bank confirmation which has an exception and comments box that specifically discloses contingent liabilities as the endorser of loans, for open letters of credit, etc.
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Of the following, which set of information does an auditor usually confirm on one form?
The AICPA standard bank confirmation form includes spaces for the bank to confirm both cash balances on deposit at the bank and collateral pledged on loans originating from the bank.
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Which of the following characteristics would most likely be indicative of check kiting?
Kiting occurs when a check is drawn on one bank and deposited in another bank and no record is made of the disbursement in the balance sheet of the bank.
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Of the following cycles, which would involve purchases, payables, and cash disbursements?
Only the expenditure cycle would involve these three aspects, whereas the cash cycle may include cash disbursements, only the expenditure cycle deals with all three.
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