Which of the following might be detected by an auditor's review of the client's sales cutoff?
A) Excessive goods returned for credit.
B) Unrecorded sales discounts.
C) Lapping of year-end accounts receivable.
D) Overstated sales for the year.

Question

Quizplus · Accepted Answer

Sales cutoff procedures are designed to ensure that all sales and related revenue are recorded in the appropriate period. Therefore, an auditor's review of the client's sales cutoff could detect overstated sales for the year, indicating that some sales were recorded in the wrong period or that the cutoff date was incorrect. Excessive goods returned for credit could be detected by reviewing returns and allowances account, but this would not necessarily relate to sales cutoff. Unrecorded sales discounts could be picked up by examining invoices or sales journals, but again, this may not specifically relate to sales cutoff. Lapping of year-end accounts receivable would affect accounts receivable, not sales cutoff.

Which of the Following Might Be Detected by an Auditor's