Tests Designed to Detect Purchases Made Just Before the End

question 76

Multiple Choice

Tests designed to detect purchases made just before the end of the year that have been recorded in the subsequent year would provide assurance about management's assertion of:

• A) accuracy.
• B) occurrence.
• C) cut-off.
• D) classification.

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Definitions:

Investment

The allocation of resources, usually money, into assets or projects expected to generate future returns or profit.

Profitability Index

A calculation that measures the relative profitability of an investment by dividing the present value of future cash flows by the initial investment cost.

Discount Rate

This rate is applied in discounted cash flow analysis to derive the current value of cash flows expected to be received in the future.

Project

A short-term effort made to develop a distinct product, service, or outcome.