Question

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

Answer 1

The proof of cash receipts is an audit process that verifies the completeness and accuracy of recorded cash transactions, ensuring they match the bank deposits.

Step-by-step explanation:

The audit procedure referred to as proof of cash receipts is particularly useful to test whether there are cash receipts that have not been recorded in the journals. This procedure helps ensure that all cash transactions are accurately captured in the financial records and are consistent with bank deposits. Balancing a checkbook regularly is a practice related to individual cash management, and involves monitoring cash flow to avoid overdrafts and associated fees. On a larger scale, banks facilitate a broad range of transactions in goods, labor, and financial capital markets by providing services such as checking accounts, savings accounts, direct withdrawals, check writing, and debit card usage.