When the client's physical inventory occurs before the last day of the year, it is still necessary to perform an accounts payable cutoff at the time of the count. In addition, the auditor must verify whether all acquisitions taking place between the count and the end of the year were added to:
A) the physical inventory.
B) Accounts Payable.
C) Accounts Payable and Cost of Goods Sold.
D) the physical inventory and Accounts Payable.

Question

Quizplus · Accepted Answer

When the physical inventory occurs before the last day of the year, it is necessary to perform an accounts payable cutoff at the time of the count. This is to ensure that all unpaid invoices relating to inventory included in the count are properly recorded in the accounts payable balance. 
In addition, the auditor must verify whether all acquisitions taking place between the count and the end of the year were added to the physical inventory and accounts payable. Therefore, the best option is D, which includes both the physical inventory and accounts payable.

When the Client's Physical Inventory Occurs Before the Last Day