help on cut-off

Cut-off is primarily about consistency.

If an item is received just before year end, it will be counted in closing inventory, and it must also be in purchases and creditors. It might not be if the invoice had not been received until early the next year. So a cut-off test on purchases id to ensure that all items in inventory have been posted to purchases (Dr) and -payables(Cr) (or to a purchase reserve (Cr) where the invoice was received after year end).

Similarly if a sale near year end has been recorded (Cr Sales, Dr Receivables) it would be wrong if that item were also counted in closing inventory. Similarly, goods might have been despatched before year-end but an invoice not issued until after year end. Cut-off tests on sales and receivables are to ensure consistent, correct treatment.

Would it be adequate to mention GRNI- Goods recieved not invoiced to be a suitable provision or place to check for goods recieved and not invoiced?

Thansk

Jen