The purchases cutoff test involves determining that _______.
A)purchase transactions occurring near the balance sheet date are recorded in the proper period
B)sales transactions occurring near the balance sheet date are recorded in the proper period
C)purchase transactions occurring near the balance sheet date are recorded at the correct amounts
D)sales and purchasing transactions occurring after the balance sheet date are recorded at the correct amounts

Question

Quizplus · Accepted Answer

The purchases cutoff test involves determining whether purchase transactions occurring near the balance sheet date are recorded in the proper period. This test helps to ensure that purchases are recorded in the correct accounting period, which is important for accurate financial reporting. Option B is incorrect because the cutoff test is not concerned with sales transactions. Option C is only partially correct, as the test is more concerned with the timing of purchases rather than their amounts. Option D is also incorrect, as the cutoff test is only concerned with transactions occurring before the balance sheet date.

The Purchases Cutoff Test Involves Determining That _______