Ch $08$ Testing Subsequent Disbursements $[$LO $8-4]$

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Testing Subsequent Disbursements

Read the overview below and complete the activities that follow.

A common step in the testing for accounts payable is to test subsequent disbursements for proper$/$improper inclusion$/$exclusion in year$-$end accounts payable.

CONCEPT REVIEW:

A common way to test accounts payable is to examine the check register after period end and make selections for testing. Items are selected and then examined for detail. A determination is then made to conclude whether the amount should have been a liability as of year$-$end and, if so$,$ if it was recorded as such.

$1.$ when searching for unrecorded liabilities, the auditors consider CASH DISBURSEMENTS recorded $\_\_\_\_\_$year end.

$2.$ accounts payable$\_\_\_\_$can be mailed to vendors from whom substantial purchases have been made.

$3.$to gain overall assurance as to the reasonableness of accounts payable, the auditor may consider$\_\_\_\_\_\_.$

$4.$ when auditors find unrecorded liabilities, before adjusting they must consider$\_\_\_\_\_.$

$5.$ auditors need to consider $\_\_\_\_\_\_$ terms for determining ownership and whether a liability should be recorded.