Sales Cutoff

Sales Cutoff

The Sales Cutoff Test ensures that sales transactions are recorded in the correct accounting period, particularly around period-end dates. This test is crucial for verifying that revenue is neither overstated nor understated due to premature or delayed recognition of sales. By aligning the timing of revenue recognition with the actual delivery of goods or services, the test supports compliance with accounting standards and enhances the accuracy of period-specific financial results.

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 accepts a Period of service if available.

Required documents

  • Sales Invoice (Pre Year End)

  • Sales Invoice (Post Year End)

Matching behavior

AuditBot will match your documents together using the following logic:

  • Sales 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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