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Chapter 10 Cash and Financial Investments

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1) Describe circumstances that will not cause an auditors to identify understatement of assets as a significant audit risk

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Management of a privately held understating assets so as to minimize income taxes might cause the auditors to identify understatement of assets as a significant audit risk

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Bank accounts not be recorded so as to make possible unrecorded, illegal payments might cause the auditors to identify understatement of assets as a significant audit risk.

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Lapping involves withholding cash receipts and covering such withholding by a subsequent entry.

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Lapping involves the manipulation of cash amounts to be included simultaneously in the balance of two or more bank accounts.

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