ICAEW ARF · Chapter 7 · Question 5 of 11
Which of the following procedures best tests the cut-off of sales?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Selecting goods despatched notes from shortly before and after the year end and checking the related sales were recorded in the correct period
Explanation
Cut-off concerns recording transactions in the correct accounting period. Examining despatches around the year end and checking when the related sales were recorded identifies items recorded in the wrong period. Agreeing invoices to orders tests occurrence, confirmations test existence of receivables, and budget comparisons are analytical procedures that are less precise.
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