Final answer:
Effective audit procedures, such as comparing recorded cash receipts against bank deposit slips, are essential for the detection of lapping. Balancing one's checkbook is a basic equivalent for personal finance management, and maintaining an accurate balance sheet is vital for businesses.
Step-by-step explanation:
The student's question revolves around the detection of lapping, which is a type of fraud where a company's employee steals money that has been received from customers and then covers up the theft by applying payments from subsequent receivables to disguise the shortfall. To detect lapping, one effective audit procedure can be comparing recorded cash receipts in detail against the items making up the bank deposit as shown on duplicate deposit slips validated by the bank. This method validates whether the recorded cash actually corresponds with the cash deposited in the bank account, allowing detection of a mismatch that might indicate lapping.
Balancing your chequebook and being vigilant about your bank transactions is crucial for personal finance management, as it helps to manage money, monitor cash flow, and avoid potential overdraft fees due to insufficient funds. Meanwhile, businesses and auditors have more complex and rigorous means, like the ones described for detecting discrepancies such as lapping. It is essential to be aware of the risks of asset-liability time mismatch and the need to maintain a healthy balance sheet with an accurate representation of a bank's assets and liabilities.