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

Question

Quizplus · Accepted Answer

The purchases cut-off assertion relates to whether purchases and related payables or expenses are recorded in the correct accounting period. To test this assertion, procedures should be designed to ensure that inventory purchased and received before the year-end was recorded. This is necessary to avoid the overstatement or understatement of inventory and cost of goods sold. Option B refers to the valuation assertion, Option C relates to the completeness assertion, and Option D pertains to the existence assertion.

Procedures Related to the Purchases Cut-Off Assertion Should Be Designed