When auditing merchandise inventory at year end, the auditor performs a purchase cutoff test to obtain evidence that · No goods observed during the physical count are pledged or sold. · All goods owned at year end are included in the inventory balance. · All goods purchased before year end are received before the physical inventory count. · No goods held on consignment for customers are included in the inventory balance.

When auditing merchandise inventory at year end, the auditor performs a purchase cutoff test to obtain evidence that

·        No goods observed during the physical count are pledged or sold.

·        All goods owned at year end are included in the inventory balance.

·        All goods purchased before year end are received before the physical inventory count.

·        No goods held on consignment for customers are included in the inventory balance.

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