Question

Assignment Question(s):​​​​​​(Marks 5)

3- What is the purpose of Cutoff Bank Statement, explain your answer?

4- What does Subsequent Events mean? Detail your answer.

Answer 1

3) The Cutoff Bank Statements are a step ahead of reconciliation in auditing which allows an auditor to verify the bank reconciliation in respect of items like deposits in transit and outstanding checks . In other words, the bank cutoff statements are obtained by the auditors, which consist of transactions for 10 to 15 days after the accounting year. Thus, the auditor confirms the outstanding checks and deposits in transit reflected in the bank reconciliation.

4) The subsequent events are defined as events which occurs after the end of the accounting year but before the financial statements have been issued to the outsiders. These subsequent events are disclosed as a foot-note underneath the financial statements. The subsequent events usually raise problems for the shareholders and investors towards estimating the returns to their investments.