When testing cutoff for sales and receivables at December 31 (year end) an auditor is confronted with the following four scenarios. Which of the four most likely requires the auditor to propose an adjusting entry at the balance sheet date? Question 24 options: Terms of trade are FOB destination. Goods were shipped on December 31, and the sale was recorded on January 8. Terms of trade are FOB shipping point. Goods were shipped on December 31, and the sale was recorded on December 31. Terms of trade are FOB destination. Goods were shipped on December 31, and the sale was recorded on December 31. Terms of trade are FOB shipping point. Goo
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
When testing cutoff for sales and receivables at December 31 (year end) an auditor is confronted with the following four scenarios. Which of the four most likely requires the auditor to propose an
Question 24 options:
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Terms of trade are FOB destination. Goods were shipped on December 31, and the sale was recorded on January 8. |
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Terms of trade are FOB shipping point. Goods were shipped on December 31, and the sale was recorded on December 31. |
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Terms of trade are FOB destination. Goods were shipped on December 31, and the sale was recorded on December 31. |
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Terms of trade are FOB shipping point. Goods were shipped on January 2, and the sale was recorded on January 4. |
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