When auditing merchandise inventory at year-end,the auditor performs a purchase cutoff 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

A purchase cutoff test ensures that all goods owned at year-end are correctly included in the inventory balance, verifying that transactions are recorded in the correct accounting period.

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