Question

The auditors use a bank cutoff statement to compare: Group of answer choices Checks dated subsequent to year-end to the outstanding checks listed on the year-end bank statement. Deposits listed on the cutoff statement to disbursements in the cash disbursements journal. Checks dated prior to year-end to the outstanding checks listed on the year-end bank reconciliation. Deposits in transit on the year-end cash general ledger account to deposits in the cash receipts journal.

Answer 1

Answer:

Checks dated prior to year-end to the outstanding checks listed on the year-end bank reconciliation.

Explanation:

The bank cutoff statement is a bank statement for the client prepared at an agreed-upon interim date which is sent directly to the auditor. Usually the auditor asks the client to have the bank prepare the cutoff statement for some period 10 to 15 days after the close of the year.

By preparing a four-column bank reconciliation ("proof of cash") for the last month of the year, an auditor will generally be able to detect: An unrecorded check written at the beginning of the month which was cashed during the period covered by the reconciliation.