Question

A check was written by an audit client on December 27 but not deposited until January 4. On the bank reconciliation of the audit client, this item would show up as which of the following:

Group of answer choices

A negative adjustment to the book balance, thus reducing it to the bank balance.  

A negative adjustment to the bank balance, thus reducing it to the book balance.

None of these answers is correct.

A positive adjustment to the bank balance, thus increasing it to the book balance.  

An audit firm is testing the depreciation expense of the client. Which of the following tests would be the most persuasive?

Group of answer choices

Recalculation of Depreciation Expense

Physical Examination of Fixed Assets

Inspection of Documents Related to Fixed Asset Additions

Confirmation of Fixed Assets

Answer 1

The answers are as follows,

1. The check was issued by the client before the year closes but it is not deposited. It must have been reduced from bank balance in books. Now it should be reduced from balance in bank to reconcile. So the answer will be a negative adjustment to the bank balance, thus reducing it to the book balance.
2. Recalculation of depreciation expense. The correctness of depreciation can be known by recalculating the same but not by verifying the fixed assets and all.