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.

Question

Quizplus · Accepted Answer

Accounts payable are amounts owed to vendors for goods or services received and recorded in the accounting system. In order to be classified as an accounts payable, the amount must be known and owed as of the balance sheet date. Option A is the only choice that meets this criteria, while the other options do not meet the full requirements for accounts payable. Therefore, option A is the best choice.

Auditors Need to Distinguish Between Accounts Payable and Accrued Liabilities