A proof of cash is effective at identifying which of the following misstatements?
A) checks written for an improper amount
B) checks issued to invalid vendors
C) fraudulent checks
D) checks recorded in the books for an amount different from that on the check

Question

Quizplus · Accepted Answer

A proof of cash compares the cash transactions listed in the company's bank statement to those recorded in the general ledger. Therefore, it is effective at identifying misstatements related to checks recorded in the books for an amount different from that on the check. This is because such misstatements will be reflected in the reconciling items between the bank statement and the general ledger, which are the focus of the proof of cash. The other misstatements listed are not directly related to the cash balance and may require other audit procedures to detect.

A Proof of Cash Is Effective at Identifying Which of the Following