Tests designed to detect goods that arrived at the warehouse just before year-end and for which the audit client took ownership that have not been recorded in the perpetual inventory records until the subsequent year would most likely provide evidence about management's assertion of:
A)accuracy.
B)occurrence.
C)valuation and allocation.
D)cut-off.

Question

Quizplus · Accepted Answer

The tests designed to detect goods that arrived just before year-end and for which the audit client took ownership that have not been recorded in the perpetual inventory records until the subsequent year would most likely provide evidence about management's assertion of cut-off. Cut-off refers to the recording of transactions in the correct accounting period. In this case, if goods were received in one year but recorded in the subsequent year, it affects the cut-off assertion. Testing for the existence of such goods provides evidence about whether the cut-off assertion is accurate or not.

Tests Designed to Detect Goods That Arrived at the Warehouse