Sales Cutoff, Inventory Valuation and Materiality Today is March 19, 2021 and you work for the firm of Teper and Lubetsky, Auditors.
You are auditing the Singh Canada Company for its Sales Cutoff for the fiscal year
ending December 31, 2020.
Singh Canada Company management's draft financial statements include these items
on the Balance Sheet:
Current Assets:
$500,000 Cash
$700,000 Accounts Receivable
$600,000 Inventory.
$1,800,000 TOTAL Current Assets
Current Liabilities:
$1,000,000 TOTAL Current Liabilities
As a result, the Current Ratio = Current Assets divided by Current Liabilities = 1.8.​