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existence of TPs bal

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › existence of TPs bal

  • This topic has 4 replies, 2 voices, and was last updated 1 year ago by Kim Smith.
Viewing 5 posts - 1 through 5 (of 5 total)
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  • August 19, 2021 at 3:32 pm #632168
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    maam is it that we cannot use the below SP for existence of TPs?

    Select a sample of trade payabels balances, agree it to its GRN and purchase order to
    confirm existence.

    August 19, 2021 at 3:53 pm #632183
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6804
    • ☆☆☆☆☆

    Existence of assets/liabilities – you start with FS and work backwards:

    FS -> TB -> Payables control a/c balance reconciled to list of individual balances -> make-up of individual balances -> purchase invoices -> GRNs.

    The GRN confirms the liability to the supplier was incurred (existence) – there is no need to trace back further to purchase order/requisition (which don’t in any case confirm the liability). You can’t agree balances directly to GRNs (or GDNs) because balances are monetary amounts ($).

    August 19, 2021 at 5:48 pm #632238
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    my bad! so stupid of me to never think about it, in the way you just explained!

    August 20, 2021 at 3:22 am #632279
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    but ma’am waittttt! we may not be able to trace total amount payable to a particular supplier to a single GRN, but we can surely trace multiple GRNs relating to goods purchased from that particular supplier and agree the payables balance with that supplier! so then in that case isnt it possible to trace existence using the procedure described here:

    Noah098 wrote:maam is it that we cannot use the below SP for existence of TPs?

    August 20, 2021 at 7:11 am #632285
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6804
    • ☆☆☆☆☆

    You wrote … “a sample of trade payabels balances ($$$$s), agree it to its GRN”

    I am saying this is NOT POSSIBLE – for any of the following reasons:
    (1) You cannot agree something that is $s to something that is not $s
    (2) LOOK at Chapter 13 – note the main activities in the purchase system … only the invoice tells you how much the liability is – the payment amount will be the invoice amount
    (3) THINK (assumed knowledge of FA) – how do you get a payables balance?
    Dr Purchases
    Cr Payable
    The INVOICE amount as recorded in the purchase day book (a book of prime entry).
    (4) GRNs are NOT recorded in a book of prime entry so cannot be “found”, “identified” directly from the payables account – only INDIRECTLY via the invoice that is recorded in the payables a/c

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