Final answer:
Accounts Payable may be overstated at the end of the accounting year in the expenditure cycle.
Step-by-step explanation:
The statement that AP may be overstated at the end of the accounting year is True in the expenditure cycle.
Accounts Payable (AP) refers to the amount of money owed by a company to its creditors for goods and services received but not yet paid for. AP is recorded as a liability on the balance sheet.
At the end of the accounting year, there is a risk that AP may be overstated due to various reasons. For example, there could be errors in recording invoices or delays in receiving and processing vendor invoices. These errors or delays can lead to an overstatement of AP.
It is important for companies to regularly reconcile their AP balances to ensure accuracy. This involves comparing the AP balance on the books with vendor statements and verifying the correctness of the recorded liabilities.