Question

A customer mails and records a check to a client for payment of an unpaid account on December 30. The client receives and records the amount on January 2. The records of the two organizations will be different on December 31. This represents:

A CUTOFF MISSTATEMENT
A TIMING DIFFERENCE
A. Yes Yes
B. No No
C. Yes No
D. No Yes

Answer 1

The records of the two organizations will be different on December 31 due to a timing difference.

Step-by-step explanation:

The records of the two organizations will be different on December 31 because of a timing difference. In this case, the customer mailed and recorded the check on December 30, but the client received and recorded the amount on January 2. This creates a timing difference because the transaction occurred in one accounting period for the customer (December) but in another period for the client (January).

A cutoff misstatement refers to errors or omissions in recording transactions at the end of an accounting period, which is not the case in this scenario. Therefore, the correct answer is:

C. Yes No