Glee Inc.is a manufacturer of musical instruments and its year end is September 30.Copa Loca,a local music school,purchased some instruments from Glee but was not satisfied with the quality and returned the goods to Glee during the last week of September.Being very busy with year end,Glee received the goods from Copa Loca on September 30 but only processed the returned merchandised and issued a credit note in October.This represents a

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This represents a cutoff (allocation) misstatement because the returned merchandise should have been accounted for in September, when it was returned, rather than in October when Glee processed it. This misstatement affects the matching principle, as revenue from the sale of the instruments should be recognized in the same period as the returned merchandise.

Glee IncIs a Manufacturer of Musical Instruments and Its Year End