When auditing merchandise inventory at year-end,the auditor performs audit procedures to ensure that all goods purchased before year-end are received before the physical inventory count.This audit procedure provides assurance about which management assertion?
A) Cutoff.
B) Existence.
C) Valuation and allocation.
D) Rights and obligations.
E) Occurrence.

Question

Quizplus · Accepted Answer

This audit procedure provides assurance about the management assertion of cutoff, which relates to whether transactions and events have been recorded in the correct accounting period. By ensuring that all goods purchased before year-end are received before the physical inventory count, the auditor can confirm that purchases have been recorded in the correct period and thus cutoff is accurate.

When Auditing Merchandise Inventory at Year-End,the Auditor Performs Audit Procedures