In testing for cutoff, the objective is to determine
A) whether all of the current period's transactions are recorded.
B) whether transactions are recorded in the correct accounting period.
C) the proper cutoff between capitalizing and expensing expenditures.
D) the proper cutoff between disclosing items in footnotes or in account balances.

Question

Quizplus · Accepted Answer

The objective of testing for cutoff is to determine whether transactions are recorded in the correct accounting period. This is important for accurate financial reporting and to ensure that financial statements present a true and fair view of the company's financial position and performance. Cutoff testing is focused on ensuring that transactions are properly recorded in the correct period, which can help prevent errors, misstatements, or fraudulent activities. Therefore, option B is the best choice.

In Testing for Cutoff, the Objective Is to Determine