Purchase Cutoff

Purchase Cutoff

The Purchase Cutoff Test ensures that purchase transactions are recorded in the correct accounting period, particularly around month-end or year-end. This test is essential for verifying that expenses and liabilities are neither understated nor overstated due to premature or delayed recording of purchases. By aligning the recognition of purchases with the actual receipt of goods or services, the test supports the accuracy of period-end financial statements and compliance with accrual accounting principles.

There are two versions of this test: “Goods” and “Services”. The document requirements are different for each of these two tests. Goods requires a delivery note and Services includes Period of Service date fields.

Required documents

  • Purchase Invoice

Matching behavior

AuditBot will match your documents together using the following logic:

  • Purchase Invoice will be matched to Nominal Ledger by Order Reference or Invoice Reference (this is a setting you can control at the start of the test)

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