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Which of the following assertions do not relate to accruals and prepayments?
1)Existence
2)Completeness
3Cutt-Off
4)Valuation
How is the assertion of cutt-off not related to accruals and prepayments because if the accruals are not recorded in the correct period they can be over/understated right?Accruals and prepayments are items on the SOFP and cut-off is not an assertion there.
However, an accrual also affects an expense and for that effect cut-off is important.
@kengarrett said:
Accruals and prepayments are items on the SOFP and cut-off is not an assertion there.However, an accrual also affects an expense and for that effect cut-off is important.
Well cannot get the logic behind this.If Expenses can be over/understated because of the cutt-off why the liabilities and assets also cannot be under/over stated because of the wrong cutt-off?
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