Unrecorded liabilities search
In accounting, unrecorded liabilities search means the audit procedure of looking at payments made and bills received after period end, and at receipts with no bill, to find obligations that existed at the balance sheet date but were never recorded. Management runs the same search before close, because what it finds is accrued.
Not a rule. Audit procedure — not codified in GAAP. US GAAP governs recognition, measurement and presentation, not bookkeeping mechanics. Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
- APVendor statements and the payables tie-out › The search for unrecorded liabilitiesFour October bills sorted by when the cost was incurred: $2,490 accrued to September, one passed under the floor, one left for October.8 min
- APPrepaid and accrued expenses: contracts, bonuses and cut-offHow an annual contract, a bonus being earned and December's unbooked charges reach the P&L in the right month, with reversing entries.12 min
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- cutoff test (which tests both directions)
- subsequent event
Nearby in the catalog
No component names this concept outright. These sit in the same part of the system.
Also in Close
Defined in Lexicon. This page is generated from that document, so the two can't disagree.