#05472 substantive cash transfers question

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  • July 17, 2013 at 5:58 pm #178764
    Anonymous
    Inactive

    Hey can anyone explain more about the meaning of dates of cash transfers on the schedule? The explanation doesn’t clear my confusion. Thanks!

    CPA-05472

    In the Bank Transfer Schedule below, which of the following cash transfers in a misstatement of cash at December 31, 20X1?

    Disbursement date Disbursement date Receipt date Receipt date

    per books per bank per books per bank

    a. 01/04/X2 01/11/X2 01/04/X2 01/04/X2

    b. 12/31/X1 01/04/X2 12/31/X1 12/31/X1

    c. 12/31/X1 01/05/X2 12/31/X1 01/04/X2

    d. 01/04/X2 01/05/X2 12/31/X1 01/04/X2

    Explanation

    Choice D is correct. since the disbursement was not recorded until January 20X2 while the receipt was recorded in December 20X1, cash will be overstated at December 31.

    Choice C and B are incorrect. Both the disbursement and the receipt are recorded in 20X1, so there will be no misstatement of cash at December 31, 20X1.

    Choice A is incorrect. Both the disbursement and the receipt are recorded in 20X2, so there will be no misstatement of cash at December 31, 20X1.

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  • July 17, 2013 at 6:04 pm #426236
    Jennifer241
    Member

    How can you have a transfer between your checking and savings and book it coming out of your checking on 01/04/X2 and into your savings account on 12/31/X1?

    Savings Cash on 12/31/X1 would be inflated, because the checking cash wouldn't show the decrease until the next year.

    Transfers in a clients books between 2 of their own accounts should be booked, in the books, on the exact same day.

    AUD - Jan 9,13 Pass
    REG - Aug 30,13 Pass
    BEC - Oct 26,13 Pass
    FAR - Dec 4,13 Pass

    Licensed CPA in the state of Oregon

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