[Anonymous]

Disbursement Date-middle 2 columns / Receipt Date-last 2 columns

Check No. / From / To / Per Books / Per Bank / Per Books / Per Bank

101 / National / Federal / Dec. 30 / Jan. 4 / Dec. 30 / Jan. 3

202 / County / State / Jan. 3 / Jan. 2 / Dec. 30 / Dec. 31

303 / Federal / American / Dec. 31 / Jan. 3 / Jan. 2 / Jan. 2

404 / State / Republic / Jan. 2 / Jan. 2 / Jan. 2 / Dec. 31

Which of the following checks might indicate kiting?

A. #101 and #303.

B. #202 and #404.

C. #101 and #404.

D. #202 and #303.

Answer: A

Kiting occurs when transfers are made from one bank account to another, but the disbursing and receiving transactions are not recorded in the same time period. Check numbers 202 and 404 indicate kiting because both show a deposit recorded in a period different from the disbursement.

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How do you tell that 202 and 404 are different? From the answer explanation, it seems that you can apply that to all 4 transactions in the table.

[Anonymous]

I remember figuring this out but I'm having a hard time because of the way it's vitually presented in the post. Is this question from the Becker text or the MCQs? I remember a couple of MCQs like this all lumped together but I don't know exactly where, so if you can give the exact reference it will be helpful to look up.

[Anonymous]

I don't know why the answer is A. It should be B. The red flags are:

202 – Receipt is on the books 4 days prior to the disbursement, which means the cash would have been counted in both checking accounts at 12/31. Cash is overstated

404 – Bank receipt is 3 days prior to the disbursement, which also means that cash was counted in both checking accounts and overstated at 12/31.

Think about how they impact the bank recon. Where are the deposits in transits and the uncleared checks? This is a cash transfer and that account should be zero at all times, because when you make one transaction, the corresponding transaction should be done immediately. Make sense?

[Anonymous]

@DJN

This is a CPAexcel MCQ under Audit Evidence – Specific Audit Areas – Cash. .

@Kricket

You're right, it should be B instead of A. Also, based on what you said, does that mean you just pay attention to the disbursement date per books and receipt date per bank, and just don't even look at the other 2 columns?

[Anonymous]

I just got this question on one of my becker homeworks and I picked B… you think materials that charge thousands of dollars could have the correct answers

[Anonymous]

I hope this helps explain why the bank date is as important as the book date and why you prepare the Cash Transfer Schedule.

https://docs.google.com/spreadsheet/ccc?key=0AnhK0gQQMhd_dHhHQkhmNjNyb2NvakxLajFRc21HU1E&usp=sharing

[Author]

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