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 ensure that transactions are recorded in the appropriate accounting period, and the primary assertion being tested is completeness - that is, all transactions that should be recorded in the period have in fact been recorded. Therefore, cutoff tests would provide assurance about management's assertion of completeness. They would not directly address valuation or allocation (although those assertions may indirectly be affected by completeness errors), existence or occurrence, or rights and obligations.

Cutoff Tests Designed to Detect Purchases Made Before the End