Which of the following most likely would be detected by an auditor's review of a client's sales cutoff?
A)Shipments lacking sales invoices and shipping documents.
B)Excessive write-offs of accounts receivable.
C)Unrecorded sales at year-end.
D)Lapping of year-end accounts receivable.

Question

Quizplus · Accepted Answer

The sales cutoff is the point in time when sales should be recognized in the financial statements. The auditor would review the client's sales cutoff to ensure that all sales made during the year-end have been appropriately recorded in the financial statements. Unrecorded sales at year-end would be a concern as they would result in an understatement of sales and an overstatement of accounts receivable.

Which of the Following Most Likely Would Be Detected by an Auditor's