What is expenditure vs accrual reconciliation?

• A. Match expenses to inventory values.
• B. Reconcile recorded expenses to actual liabilities and obligations; ensure accuracy.
• C. Compare expenditures to tax liabilities.
• D. Reconcile payroll with timekeeping.

Answer: (B)

Expenditure vs accrual reconciliation focuses on making sure what the organization has recorded as expenses matches the actual obligations it owes at a given date. In accrual accounting, expenses are recognized when incurred and a liability is created if payment hasn’t been made yet. The reconciliation verifies that the recorded expenditures align with the related liabilities and obligations, catching timing differences, unpaid invoices, or misposted accruals so the financial statements are accurate. It’s about ensuring the recognition of expenses and the corresponding liabilities are proper, not about matching expenses to inventory values, tax liabilities, or payroll timekeeping.