Question

    Which of the following statements are required to verify

    trade creditors? Statement 1: Obtain the schedule of creditors and examine it with reference to individual creditors account. Statement 2: Inspect documents underlying purchases such as invoices, receiving reports, etc. and verify individual creditor’s accounts balance against these documents. Statement 3: Examine relevant records and documentation supporting the transactions to assess the validity and accuracy of loans.
    A Statements 1, 2 and 3 Correct Answer Incorrect Answer
    B Statements 1 and 3 only Correct Answer Incorrect Answer
    C Statements 1 and 2 only Correct Answer Incorrect Answer
    D Statements 2 and 3 only Correct Answer Incorrect Answer

    Solution

    Statement 1: Obtain the schedule of creditors and examine it with reference to individual creditors account. This statement is necessary to verify trade creditors. By obtaining the schedule of creditors and cross-referencing it with individual creditors' accounts, one can ensure the accuracy and completeness of the information. Statement 2: Inspect documents underlying purchases such as invoices, receiving reports, etc. and verify individual creditor's accounts balance against these documents. This statement is also essential for verifying trade creditors. By inspecting the supporting documents such as invoices and receiving reports, one can confirm the validity and accuracy of the purchases and compare them to the balances in individual creditor's accounts. Statement 3: Examine relevant records and documentation supporting the transactions to assess the validity and accuracy of loans. This statement is not directly related to verifying trade creditors. It seems to refer to assessing the validity and accuracy of loans, which is a separate matter from trade creditors.

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