There are three main types of revenue manipulations.Which of the following revenue manipulations affects the cutoff objective?
A)avoiding recording of returns and allowances for the year
B)recording subsequent period sales as current period sales
C)understatement of bad debts
D)creation of fictitious sales that are misclassified as revenue

Question

Quizplus · Accepted Answer

Recording subsequent period sales as current period sales affects the cutoff objective because it shifts revenue from a later period to the current period, which can artificially inflate the current period's revenue. The other options do not directly affect cutoff. Avoiding recording returns and allowances affects the completeness objective, understatement of bad debts affects the valuation/accuracy objective, and creation of fictitious sales affects the existence/objective evidence objective.

There Are Three Main Types of Revenue Manipulations