Purchase Cutoff Procedures Should Be Designed to Test Whether or Not

question 12

Multiple Choice

Purchase cutoff procedures should be designed to test whether or not all inventory:

• A)purchased and received before the year-end was recorded before year-end.
• B)on the year-end balance sheet was carried at lower of cost or market.
• C)on the year-end balance sheet was paid for by the company.
• D)owned by the company is in the possession of the company.

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Definitions:

Bank Service Charge

Fees charged by a bank to a customer for account maintenance and other banking services.

Credit Memorandum

A document issued by a seller to a buyer, reducing the amount the buyer owes, often due to a return or refund.

Note Receivable

A promissory note indicating that an entity is owed money by another and the terms under which repayment must occur.

NSF Check

A check that cannot be processed due to insufficient funds in the account it's drawn on, also known as a "bounced" check.