Purchase cutoff procedures should be designed to test whether or not all inventory:
A)purchased and received before the year-end was recorded before year-end.
B)on the year-end balance sheet was carried at lower of cost or market.
C)on the year-end balance sheet was paid for by the company.
D)owned by the company is in the possession of the company.

Question

Quizplus · Accepted Answer

Purchase cutoff procedures should verify that all purchases and received inventory before year-end have been recorded in the financial statements. This provides assurance that inventory is not overstated in the financial statements. The other options (B, C, and D) relate to inventory valuation and ownership, which may also be important to test, but are not directly related to the timing of when inventory is recorded in the financial statements.

Purchase Cutoff Procedures Should Be Designed to Test Whether or Not