The audit procedure referred to as proof of cash receipts is particularly useful to test
A) time lags in making deposits.
B) whether all recorded cash receipts have been deposited in the bank.
C) whether there are cash receipts that have not been recorded in the journals.
D) the client's reconciliation between cash receipts and bank deposits.

Question

Quizplus · Accepted Answer

The proof of cash receipts audit procedure is designed to test whether all recorded cash receipts have been deposited in the bank. This helps to ensure that the financial statements are accurate and complete. The auditor will compare the recorded cash receipts to the bank deposits and investigate any discrepancies. This procedure is particularly useful in detecting fraud or other irregularities related to cash receipts.

The Audit Procedure Referred to as Proof of Cash Receipts