For each of the following, explain if an auditor’s review of the client’s sales cutoff would detect these problems: 

(a) Would excessive goods returned for credit be detected by a sales cut-off test – why or why not?

(b) Would unrecorded sales discounts be detected by a sales cut-off test – why or why not? 

(c) Lapping of year-end accounts receivable be detected by a sales cut-off test – why or why not? 

(d) Inflated sales for the year – could it be detected by a sales-cut-off test – why or why not?

Answer rating: 100% (QA)

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