Purchase Cutoff Procedures Should Be Designed to Test Whether All

question 61

Multiple Choice

Purchase cutoff procedures should be designed to test whether all inventory:

• A)Owned by the company was recorded.
• 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:

Supplies Expense

The cost incurred by a business for small items or materials that are used during the operation of the business.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to update the balances of certain accounts.

Inventory

The cumulative quantity of products and materials a business possesses for the aim of selling or manufacturing.

Alternative Adjusting Entries

Adjustments made in the accounting records to record revenues that have been earned but not yet recorded or expenses that have been incurred but not yet recorded.