When Do Cutoff Mistakes Most Commonly Occur

question 74

Multiple Choice

When do cutoff mistakes most commonly occur?

• A) The auditor mistakenly asks the bank for the end-of-year bank statement instead of the statement which would include the two succeeding weeks.
• B) Subsequent period transactions are recorded in the current period.
• C) Current period transactions are recorded in the subsequent period.
• D) B and C

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Definitions:

Net Income

The total earnings or profit of an individual or business after deducting expenses and taxes.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Variable Costs

Expenses that vary in relation to the amount of product or service produced by a company.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.