In preparing for the audit of cash,the auditors perform analytical procedures concerning cash balances.Which of the following would be the best source of information for use in the estimate of cash?
A) Prior-years' balances.
B) Management inquiry.
C) Cash budgets.
D) Aged accounts receivable reports.

Question

Quizplus · Accepted Answer

Cash budgets provide a detailed projection of expected cash inflows and outflows, which can be compared to actual cash balances to help auditors estimate the accuracy of the cash balance. Prior years' balances may provide some helpful data, but they do not take into account changes in the company's operations or economic environment. Management inquiry alone is not sufficient evidence, and aged accounts receivable reports are not directly relevant to estimating cash balances.

In Preparing for the Audit of Cash,the Auditors Perform Analytical