When goods are received at the end of the accounting period, and the invoice is not received until after the start of the following period, a problem may arise as to when to record the liability.This is referred to as a(n):
A)Obligation referral
B)Cutoff issue
C)Liability deferral
D)Channel stuffing

Question

Quizplus · Accepted Answer

This scenario is referred to as a cutoff issue, which occurs when there is uncertainty as to which accounting period a transaction should be recorded in. In this case, it is unclear whether the liability should be recorded in the current accounting period, when the goods were received, or in the following period, when the invoice was received. Proper cutoff procedures should be in place to ensure accurate recording of transactions. Option A, C, and D are not relevant to the scenario.

When Goods Are Received at the End of the Accounting