Deposits recorded as cash receipts near the end of the year, deposited in the bank in the same month and included in the bank reconciliation as a deposit in transit is a type of misstatement in cash that will not normally be discovered as part of the audit of tests of a bank reconciliation.

Question

Quizplus · Accepted Answer

Deposits in transit are recorded on the bank reconciliation as reconciling items, and therefore may not be discovered by tests of cash balances. This is a typical timing difference between the bank and the company's books, but the amount should be disclosed as part of the audit.

Deposits Recorded as Cash Receipts near the End of the Year