ExpertMedium1 markMultiple Choice
CPA · Question 68 · Area III: Performing Procedures
An auditor is testing the 'Cutoff' assertion for sales. Which of the following procedures is MOST appropriate?
An auditor is testing the 'Cutoff' assertion for sales. Which of the following procedures is MOST appropriate?
Answer options:
A.
Confirm year-end accounts receivable.
B.
Compare a sample of sales invoices from the last few days of the current year and the first few days of the next year to shipping documents.
C.
Review sales returns after year-end.
D.
Trace shipping documents to the sales journal for the entire year.
How to approach this question
Cutoff = Before and After. Look for the procedure that checks the 'boundary'.
Full Answer
B.Compare a sample of sales invoices from the last few days of the current year and the first few days of the next year to shipping documents.✓ Correct
Cutoff tests focus on the period immediately surrounding the balance sheet date to ensure transactions are recorded in the proper period.
Common mistakes
Testing only one side of the cutoff.
Practice the full CPA AUD Practice Exam 4
78 questions · hints · full answers · grading
More questions from this exam
Q01A CPA firm is performing an audit of a nonissuer, TechInnovate Inc. The engagement partner's spou...HardQ02An auditor is performing an audit of an issuer, Global Corp, in accordance with PCAOB standards. ...HardQ03A CPA is performing an audit of a county government entity that receives federal financial assist...HardQ04During the audit of an employee benefit plan subject to ERISA, the auditor discovers that the pla...HardQ05An auditor is evaluating the 'integrity' principle of the AICPA Code of Professional Conduct. Whi...Medium