What does three-way matching in accounts payable consist of?

Three-way matching in accounts payable is a crucial process to ensure that a company's payments for goods and services are accurate and legitimate. It consists of the verification of three important documents: the purchase order, the invoice, and the receiving report.

The purpose of this matching process is to validate that the items or services ordered through the purchase order were actually received, as confirmed by the receiving report, and that the vendor's invoice corresponds to both the purchase order and the receiving report. This ensures that the company is only paying for what it has actually received and that all details align properly.

When each of these documents matches, it significantly reduces the risk of overpayments, fraud, or disputes with vendors. Therefore, by verifying against these three key documents, organizations can maintain accurate financial records and ensure appropriate controls within their accounts payable processes. Other options listed focus on different combinations of documents that do not fulfill the three-way matching requirement effectively.