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Question 7 The best test of balances for accounts payable is: recalculation. confirmation from the vendor....

Question 7 The best test of balances for accounts payable is:

recalculation.

confirmation from the vendor.

reconciliation of the accounts payable listing to the control account.

review of subsequent cash disbursements and underlying documents to determine when the liability was incurred.

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Answer #1

The best test of balances for accounts payable is the confirmation from the vendor. As per the standard auditing this is also called as external confirmation whereby the balance is confirmed from the vendors and tallied with the the balances in the books of accounts of the company.

This is the best test of balance because it is not connected to the the internal process of the company but it is connected with the external people.All the other options are related to the internal process or internal books of accounts whereby any mistake in one of the accounts will be very hard to rectify because the same mistake will be repeated in the other ledger account .

Therefore the correct option is confirmation from the vendor.

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