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) none of the above

Question

Quizplus · Accepted Answer

This is a timing difference because the transaction was recorded on different dates by the two organizations. If the transaction had been recorded on the same date by both organizations, there would have been no difference in their records. A cutoff misstatement occurs when transactions are recorded in the wrong period, but in this case, the transaction was recorded in the correct period by both organizations, just on different dates.

A Customer Mails and Records a Cheque to a Client