Question

The primary concern in testing payroll-related liabilities is to make sure that:

1) accruals are properly valued.
2) transactions are recorded in the proper period.
3) there are no understated or omitted accruals.
4) the accruals are not overstated.

Answer 1

The primary concern in testing payroll-related liabilities is to ensure accurate valuation, recording, inclusion, and avoidance of overstatement of the accruals.

Step-by-step explanation:

The primary concern in testing payroll-related liabilities is to make sure that:

1. Accruals are properly valued: It is important to accurately estimate the value of payroll-related liabilities to ensure that the financial statements reflect the true obligations of the company.
2. Transactions are recorded in the proper period: Payroll transactions should be recorded in the correct accounting period to ensure accurate financial reporting.
3. There are no understated or omitted accruals: All payroll-related liabilities should be included in the financial statements to provide a complete and accurate picture of the company's financial position.
4. The accruals are not overstated: Payroll-related liabilities should not be overstated, as this could mislead stakeholders about the company's financial health.