You are reviewing sales to discover cutoff problems. If the client's policy is to record sales when title to the merchandise passes to the buyer, then the books and records would contain errors if the December 31 entries were for sales recorded
A) before the merchandise was shipped.
B) at the time the merchandise was shipped.
C) several days subsequent to shipment.
D) at a time after the point at which title passed.

Question

Quizplus · Accepted Answer

If the client’s policy is to record sales when title to the merchandise passes to the buyer, then sales should not be recorded until the merchandise has been shipped and title has passed to the buyer. Recording sales before the merchandise has been shipped would result in cutoff errors, as the sales recorded would not meet the policy criteria for recognition.

You Are Reviewing Sales to Discover Cutoff Problems