In short
Cutoff is the assertion that transactions and events have been recorded in the correct accounting period.
Key takeaways
- Auditors test it by examining transactions just before and after year-end, such as shipping documents and receiving reports.
- Shipping terms decide when a sale or purchase belongs in the period.
- Cutoff errors in inventory affect cost of goods sold in two periods.
Where it's tested
AUD: Evidence: Types & Procedures — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A cutoff bank statement is used primarily to: