ACCA Applied Knowledge · Financial Accounting · Payables account reconciliations
Which of the following best describes the main purpose of reconciling a supplier's statement with the payables ledger account for that supplier?
The purpose is to compare the supplier's statement with the company's payables ledger account, identify any differences and correct errors or omissions, so the amount owed to the supplier is accurately stated and payment can be made with confidence.
- ATo identify differences between the supplier's records and the company's records and ensure the payables balance is correctCorrect
- BTo confirm that the bank balance agrees with the bank statement
- CTo calculate the discount the company will receive on future purchases
- DTo ensure that the total of the payables ledger has been posted to the cash book
Explanation
A supplier statement reconciliation compares what the supplier says is owed with the company's own ledger account. Differences such as timing, errors or omissions are investigated so that the payables balance is accurate. Confirming the bank balance is the purpose of a bank reconciliation, not a supplier reconciliation.
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