Cutoff tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of
A)valuation or allocation.
B)existence or occurrence.
C)completeness.
D)rights and obligations.

Question

Quizplus · Accepted Answer

Cutoff tests are designed to test the completeness assertion of management, which ensures that all transactions and events that should have been recorded have been recorded. Specifically, cutoff tests aim to detect transactions that should have been recorded in one period but were recorded in another period, which is a test for the completeness assertion. Therefore, the choice is C, completeness. The other assertions are not directly related to cutoff tests. Valuation or allocation concerns the accuracy and appropriateness of financial statement amounts, existence or occurrence tests whether the recorded transactions actually occurred, and rights and obligations ensure that the entity has legal rights to the assets and liabilities shown in the financial statements.

Cutoff Tests Designed to Detect Purchases Made Before the End