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ACCA Applied Knowledge · Financial Accounting · Payables account reconciliations

Why is a supplier statement reconciliation regarded as stronger evidence of the completeness of payables than a review of the payables ledger alone?

A supplier statement is prepared by an external party, so it gives independent evidence of what is owed and can reveal invoices the company never recorded. A review of the company's own ledger cannot detect omitted liabilities in the same way.

  1. ABecause the statement is prepared by an independent external party and may reveal liabilities that were never recorded in the ledgerCorrect
  2. BBecause the statement is produced from the company's own books and so is always accurate
  3. CBecause the statement removes the need to record invoices received after the year end
  4. DBecause the statement shows the company's expected discounts

Explanation

The supplier's statement originates outside the company, so it provides independent evidence of the amount owed. It can reveal unrecorded invoices that the ledger lacks. It is not prepared from the company's books, so the second option is wrong.

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