Which of the following most likely would be detected by a review of a client's sales cutoff?
A)Excessive sales discounts
B)Unrecorded sales for the year
C)Unauthorized goods returned for credit
D)Lapping of year-end accounts receivable

Question

Quizplus · Accepted Answer

Sales cutoff refers to the recognition of sales revenue in the correct period. Therefore, unrecorded sales for the year are most likely to be detected by reviewing the sales cutoff as they could be recorded in the wrong period, leading to an understatement of sales revenue for the current year. Excessive sales discounts, unauthorized goods returned for credit, and lapping of year-end accounts receivable are accounting issues that could be detected through other audit procedures.

Which of the Following Most Likely Would Be Detected by a Review