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12 November, 08:46

The primary reason for preparing a reconciliation between interest-bearing obligations outstanding during the year and interest expense presented in the financial statements is to A. Evaluate internal control over securities. B. Determine the validity of prepaid interest expense. C. Ascertain the reasonableness of imputed interest. D. Detect unrecorded liabilities.

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  1. 12 November, 10:29
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    D. Detect unrecorded liabilities.

    Explanation: Unrecorded liabilities are debts which may not have been captured in the financial statements. These liabilities if not detected will lead to wrong reporting and render the financial statements incomplete.

    Audtors are expected to effective ensure this financial statements captures all the Unrecorded liabilities through a reconciliation of interest-bearing obligations outstanding and interest espences presented in the financial statement.
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