Cutoff Testing
Accounting glossary · Understand, connect, apply
Cutoff testing checks whether transactions around a reporting date are recorded in the appropriate accounting period.
Example
A December invoice relates to goods whose control transfers in January. The auditor compares shipping terms and delivery records with the recorded revenue date.
Remember the difference
An invoice date can differ from the relevant recognition date. Start with the transaction terms and the accounting rule that applies.
Browse the accounting glossary · PCAOB reference: AS 1105
Prepared with AI assistance. Examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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