Goods were dispatched to a customer of Lavanya Ceramics Ltd. on 31 March (the year-end) with control passing on dispatch, but the invoice was raised on 2 April. Which procedure best detects such an error?

Correct answer: C) Examining dispatch records for a few days before and after the year-end and matching them with the period in which sales were recorded

Explanation

This is a sales cut-off issue. Revenue should be recognised in the period in which control passed, i.e. March. Cut-off testing involves matching dispatch documents around the year-end with the period of recording to ensure sales are recorded in the correct period. Bank confirmations and AGM minutes do not address this.