Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about the PCAOB assertion of:
A)presentation.
B)completeness.
C)rights.
D)existence.

Question

Quizplus · Accepted Answer

Cutoff tests are designed to ensure that transactions that occurred during the period under audit are recorded in the correct period. By focusing on credit sales made before year-end that were recorded in the subsequent year, the auditor is testing for completeness. This is because if these sales are not recorded in the correct period, it could understate sales and accounts receivable balances at the year-end. The other assertions, such as presentation, rights, and existence, are not directly related to cutoff testing.

Cutoff Tests Designed to Detect Credit Sales Made Before the End