A customer mails and records a cheque to a client for payment of an unpaid account on December 30. The client receives and records the amount on January 2. The records of the two organisations will be different on December 31.
A) This is a timing difference.
B) This is a cutoff misstatement.
C) Both A and B
D) Neither A nor B

Question

Quizplus · Accepted Answer

The difference in records is due to a timing difference, as the payment was recorded in different periods for the two organizations. It is not a cutoff misstatement as the transaction was recorded in the appropriate period for each organization, but on different dates based on when they received and recorded the payment.

A Customer Mails and Records a Cheque to a Client