Question

Which accounts should be confirmed with outside sources? Briefly describe from whom they should be confirmed and the information that should be confirmed.

a) Trade Accounts Receivable - Confirmations should be obtained from customers, verifying the accuracy of outstanding balances and payment terms.
b) Expenses (other than legal) - Confirmations should be obtained from relevant service providers, validating the accuracy of billed amounts and terms of payment.
c) Property, Plant, and Equipment - Confirmations should be obtained from appraisers to verify the fair market value of tangible assets.
d) Accrued Liabilities - Confirmations should be obtained from creditors to verify the accuracy of outstanding obligations and terms of payment.

Answer 1

Accounts such as Trade Accounts Receivable, Expenses (other than legal), and Accrued Liabilities should be confirmed with outside sources. Verification should be obtained from customers and service providers for outstanding balances, billed amounts, and payment terms.

Step-by-step explanation:

When it comes to confirming accounts with outside sources, there are several that should be verified:

1. Trade Accounts Receivable: Confirmations should be obtained from customers to validate outstanding balances and payment terms.
2. Expenses (other than legal): Confirmations should be obtained from relevant service providers to ensure the accuracy of billed amounts and payment terms.
3. Accrued Liabilities: Confirmations should be obtained from creditors to verify the accuracy of outstanding obligations and terms of payment.

For example, when confirming Trade Accounts Receivable, the company would reach out to its customers and ask them to confirm the amount they owe and the payment terms.