The Overall Objective in the Audit of Accounts Payable Is

question 97

Multiple Choice

The overall objective in the audit of accounts payable is to determine whether accounts payable

• A) are fairly stated and properly disclosed.
• B) are overstated.
• C) are understated.
• D) are accurately stated.

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Definitions:

Accounts Payable

The amounts a company owes to its suppliers or vendors for goods or services received but not yet paid for; a liability on the balance sheet.

Collections Float

Float created while funds from customers’ cheques are being deposited and cleared through the cheque collection process.

Disbursement Float

Float created before cheques written by a firm have cleared and been deducted from the firm’s account. Disbursement float causes the firm’s own cheque-book balance to be smaller than the balance on the bank’s records.

Net Float

The difference between a firm’s disbursement float and collections float.