When auditing merchandise inventory at year-end, the auditor performs a purchase cut off test to obtain evidence that
A)All goods purchased before year-end are received before the physical inventory count.
B)Goods held on consignment for customers are not included in the inventory balance.
C)The stock of inventory on hand at year-end is neither pledged nor sold.
D)All goods owned at year-end are included in the inventory balance.

Question

Quizplus · Accepted Answer

The purchase cut-off test ensures that all goods owned by the company at year-end, regardless of whether they have been received, are included in the inventory balance.

When Auditing Merchandise Inventory at Year-End, the Auditor Performs a Purchase