Question

Select the necessary words from the list of possibilities to complete the following statements. Statements Answer 1. An_ of liabilities will exaggerate the financial strength of a company. understatement 2. Auditors are primarily concerned with establishing the of recorded accounts payable. In comparison to the confirmation of accounts receivable, the confirmation of accounts payable is performed frequently Accounts payable from important vendors should be confirmed, even though the accounts have at year-end. _ balances When unrecorded liabilities are discovered by the auditors, they should evaluate whether the omission is sufficiently material to warrant When observing the taking of a physical inventory at year-end, the auditors will record the serial number of the last _issued to verify the accuracy of the cutoff of accounts payable. Proper balance sheet presentation of accounts payable requires that any material amounts payable to such as directors and officers, be disclosed separately from other accounts payable. 8. Auditors often obtain written from management regarding the existence of unrecorded payables. Most represent obligations payable sometime during the succeeding period for services of a continuing nature received before the balance sheet date. 10 Because the auditors are primarily concerned with the accounts payable is performed after the year-end date. ___of recorded payables, much of the audit work on

Your Choices are:

Accrued Liabilities

An Adjusting Journal Entry

Completeness

Less

Receiving Report

Related Parties

Representations

Understatement

Zero

Answer 1

1. An understatement of liabilities will exaggerate the financial strength of a company.

2. Auditors are primarily concerned with establishing the completeness of recorded accounts payable.

3. In comparison to the confirmation of accounts receivable, the confirmation of accounts payable is performed less frequently.

4. Accounts payable from important vendors should be confirmed, even though the accounts have zero balances at year-end

5. When unrecorded liabilities are discovered by the auditors, they should evaluate whether the omission is sufficiently material to warrant an adjusting journal entry

6. When observing the taking of a physical inventory at year-end, the auditors will record the serial number of the last receiving report issued to verify the accuracy of the cutoff of accounts payable.

7. Proper balance sheet presentation of accounts payable requires that any material amounts payable to related parties such as directors and officers, be disclosed separately from other accounts payable.

8. Auditors often obtain written representation from management regarding the existence of unrecorded payables.

9. Most accrued liabilities represent obligations payable sometime during the succeeding period for services of a continuing nature received before the balance sheet date.

10. Because the auditors are primarily concerned with the completeness of recorded payables, much of the audit work on accounts payable is performed after the year-end date.