- This topic has 2 replies, 2 voices, and was last updated 4 months ago by
.
- Posts
How is this a cut off concern?
As a result, the inventory count is to be spread over 29, 30 and 31 August 20X5 and adjustments will be made for goods received and dispatched between the date the inventory is counted and the year end.
Counting inventory on different dates increases the risk that transactions are allocated to the wrong accounting period. A “clean” cut-off is best achieved by stopping all movements and counting all inventory on the last day of the reporting period. The last goods received/despatch note numbers of goods movements in/out immediately before the count are used in cut-off testing of purchase/sales transactions.
I don’t have the Q to hand, but if there are goods movements 29-31st August (presumably), they will all have to be correctly accounted for. This relies on complete and accurate recording of all goods movements.
I think there is quite a detailed explanation of sales/purchases cut-off in the inventory chapter (23?) in the Study Hub.
- You must be logged in to reply to this topic.