Purchase Cut-Off Procedures Should Be Designed to Test Whether or Not

question 4

Multiple Choice

Purchase cut-off procedures should be designed to test whether or not all inventory:

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

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Definitions:

Production Supervisor

An individual responsible for overseeing the daily operations of manufacturing plants and ensuring that production targets are met efficiently and safely.

Prime Cost

The total cost of direct materials and direct labor incurred in producing goods.

Conversion Cost

The combined cost of direct labor and manufacturing overheads incurred to convert raw materials into finished goods.

Direct Labor

The wages or salaries paid to workers directly involved in the production of goods or services.