Peprah Company pays its accounts payable 45 days after receipt of the goods or services. In this case, which audit procedure should be used to detect any unrecorded liabilities?
A) Examine cash disbursements for several weeks after the balance sheet date.
B) Reconcile purchase orders to requisition orders.
C) Reconcile purchase orders to receiving reports.
D) Reconcile purchase orders to vendor invoices.

Question

Quizplus · Accepted Answer

Examining cash disbursements for several weeks after the balance sheet date helps in identifying any payments made for liabilities that were not recorded as of the balance sheet date, thus detecting unrecorded liabilities.

Peprah Company Pays Its Accounts Payable 45 Days After Receipt