Auditors Need to Distinguish Between Accounts Payable and Accrued Liabilities

question 99

Multiple Choice

Auditors need to distinguish between accounts payable and accrued liabilities in designing the appropriate control and substantive tests.A liability is properly accounted for as an account payable if:

• A)the amount is known and owed as of the balance sheet date.
• B)the amount can be estimated and is owed at the balance sheet date.
• C)the amount is known at the balance sheet date and owed by the end of the next fiscal year.
• D)the amount is estimated and owed within 90 days of the balance sheet date.

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Definitions:

Company Profits

The financial gain that a company obtains after deducting all its expenses from its total revenues.

Restructuring

The process of altering the organizational, operational, or financial setup of a company to make it more profitable, efficient, or better organized for its current needs.

Systematic Change

A comprehensive and coordinated effort to modify the structures, processes, or policies of an organization or society to achieve significant improvements.

Work Redesign

The process of reevaluating and altering jobs or workflows to improve employee productivity and job satisfaction.