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

Question

Quizplus · Accepted Answer

Purchase cut-off procedures are used to ensure that all purchases made by the company before year-end have been recorded in the year-end financial statements. Therefore, option B is the best choice as it directly addresses the purpose of purchase cut-off procedures. Option A is not relevant as it pertains to the valuation of inventory, not cut-off procedures. Option C is not directly related to cut-off procedures, as it deals with the physical possession of inventory. Option D is also not directly related to cut-off procedures, as it deals with the payment for inventory and not the recording of purchases.

Purchase Cut-Off Procedures Should Be Designed to Test Whether or Not