A proof of cash is not an effective procedure for identifying which of the following types of misstatements?
A) All recorded disbursements were paid by the bank.
B) All recorded cash receipts were deposited.
C) All amounts that were paid by the bank were recorded.
D) Some checks were written for incorrect amounts.

Question

Quizplus · Accepted Answer

A proof of cash can detect misstatements related to recorded disbursements and receipts that were not actually paid or deposited, as well as any discrepancies between the bank statement and the company's records. However, it is not an effective procedure for identifying misstatements related to the accuracy of recorded amounts, such as checks written for incorrect amounts. Other audit procedures, such as testing for accuracy and completeness of transactions, would be more appropriate in detecting such misstatements.

A Proof of Cash Is Not an Effective Procedure for Identifying