An important consideration in evaluating the fairness of the amounts accrued for vacation pay,sick pay,and other benefits is the
A)consistent accrual of these liabilities relative to those of the preceding year.
B)actual expense incurred for the prior period.
C)amount expended to date in the current period.
D)profitability of the client,which will enable these liabilities to be met.

Question

Quizplus · Accepted Answer

The consistent accrual of vacation pay, sick pay, and other benefits relative to those of the preceding year provides a basis for evaluating the fairness of the amounts accrued. This ensures that the company is consistently recognizing and recording these liabilities in a fair and accurate manner over time, which can help prevent manipulation or misstatement of financial statements. Option B, C, and D are not relevant in determining the fairness of the accrued amounts as they do not provide a basis for evaluating the consistency or accuracy of the accruals.

An Important Consideration in Evaluating the Fairness of the Amounts