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TPs Substantive procedure

Former userFormer user5y ago

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KimKimTutor5y ago#1
Assume 31 December reporting date: $1,000 paid on 3rd January - why? Either already owed at 31 Dec - in which case it must be recorded as a liability at the reporting date OR it is a "next year" expense. After-date payments only reduce the liability after the reporting date - they don't change the reported position as at the reporting date. Yes you could expand on "correct period" - e.g. "in 20X0" but take care with use of "current period" - in AUDIT context "current" generally means the year covered by the financial statements. Yes your doubt 2 is fine.
KimKimTutor5y ago#2
Perhaps you need to look back to FA/F3 and remind yourself of some double-entry bookkeeping. If $1,000 (in my example) is included in y/e TP, double entry (ALREADY made) was: Dr Expense/asset and Cr TP. If $1,000 not in y/e TP but should be accrued, the y/e adjustment is: Dr Expense/asset and Cr Accrual. AFTER the y/e, the D/E arising from the cashbook entry is then: Dr TP/accrual and Cr Cash. Can you see that "and any after date payments do not reduce current period TPs balance and accruals listing" is meaningless? It is simply not possible.