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) Accounts Receivable - Confirmations should be obtained from customers, verifying the accuracy of outstanding balances and payment terms.
b) Property, Plant, and Equipment - Confirmations should be obtained from suppliers to validate the existence and valuation of tangible assets.
c) Cash in Bank - Confirmations should be obtained directly from financial institutions, confirming account balances and the existence of any restrictions on the account.
d) Accrued Liabilities - Confirmations should be obtained from creditors to verify the accuracy of outstanding obligations and terms of payment.

Answer 1

Confirming financial accounts like Accounts Receivable and Cash in Bank with customers and financial institutions, respectively, ensures the accuracy of a company's financial statements. Property, Plant, and Equipment need verification from suppliers, while Accrued Liabilities should be confirmed with creditors.

Step-by-step explanation:

Accounts that should be confirmed with outside sources typically include the following:

1. Accounts Receivable - Confirmations should be obtained from customers, verifying the accuracy of outstanding balances and payment terms.
2. Property, Plant, and Equipment - Confirmations should be obtained from suppliers to validate the existence and valuation of tangible assets.
3. Cash in Bank - Confirmations should be obtained directly from financial institutions, confirming account balances and the existence of any restrictions on the account.
4. Accrued Liabilities - Confirmations should be obtained from creditors to verify the accuracy of outstanding obligations and terms of payment.

These confirmations are essential in ensuring the accuracy of financial statements and are a key aspect of financial audits.