A Confirmation Is Performed Less Frequently for Accounts Payable Than

question 29

Multiple Choice

A confirmation is performed less frequently for accounts payable than it is for accounts receivable because

• A) only a negative confirmation can be sent.
• B) confirmation offers no assurance that unrecorded liabilities will be discovered.
• C) it is only performed when detection risk is high.
• D) it specifies the amount due to the supplier.

Comprehend the ethical considerations and security risks in digital information sharing and communication.

Understand measures for safeguarding information in organizations and the role of policies in guiding technology use.

Recognize the limitations of virtual communication in effectively replacing face-to-face interactions in certain contexts.

Understand the nuances of message delivery and scanning behavior in online content.

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Definitions:

Inventory Holding Period

Inventory holding period measures the average time a company holds inventory before selling it, reflecting the efficiency of inventory management and its impact on cash flow.

Payables Deferral Period

The average length of time between a firm’s purchase of materials and labor and the payment of cash for them. It is calculated by dividing accounts payable by credit purchases per day (cost of goods sold/365).

Line of Credit

A flexible loan arrangement with a financial institution that allows a borrower to draw upon funds up to a specified limit at their discretion.

Financial Strength

The ability of an entity to meet its financial obligations, often evaluated through metrics like liquidity ratios, solvency ratios, and profitability.