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Dear tutor,
I understand that for the cut-off test against purchase and sales, we need to start the test with the GDNs and GRNs.
May I know whether the GDNs and GRNs are the documents generated by a company? Is it like the kind that upon receipt of gods, the company then issues the goods received note and then based on the goods receipt note , updates the inventory record.
However, if there are no GRNs, what alternative procedures could we use to perform the cut-off test against purchases?
Thank you.
GDNs and GRNs are generated by the company. If there are no GRNs you would have to investigate how they know that goods are received and that any subsequent invoice can be paid. I should think that there must be some record of goods received otherwise they are in real difficulty with payables.
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