Cutoff Tests Designed to Detect Purchases Made Before the End

question 49

Multiple Choice

Cutoff tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of

• A)valuation or allocation.
• B)existence or occurrence.
• C)completeness.
• D)rights and obligations.

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Definitions:

Overapplied Manufacturing Overhead

A scenario in which the overhead costs assigned to manufacturing exceed the actual overhead expenses incurred.

Cost of Goods Sold

An expense measured and recorded on the income statement, representing the total cost of goods that were sold during a specified period.

Manufacturing Overhead Account

An account that tracks indirect production costs such as factory utilities, maintenance, and rent.

Job Costing

A method of costing that assigns expenses to specific jobs or projects.