What is Sales cut-off test?

This is a principle of matching concept in accounting and auditing. For a sales to be recognised, the goods must be delivered and thus the title is passed to your customer. The customer is then liable for the balance due from him. So, we have to check for the last ,say, 5 invoices, to identify whether goods had been delivered and thus stock had been deducted to the cost. If goods had not be delivered before the year end, then this sales should be accounted for in next year's account. And, the cost of sales should not be deducted thereof.
By the same token, you have to check the sybsequent sales to see whether the goods are delivered after the year end. If goods had been delivered before year end, this had to be accounted for as last year's sale.
To conclude, sale (income ) and cost of sales (ourchases + direct expenses) must be matched within the same accounting period. There must be a clear cut-off in 2 different accounting periods.

Sales cut-off test 是指要測試銷售入賬期是否入對。 假設客戶將應入當年度延至下一年度才入，利潤及稅收會減少。 反之，將下年度銷售提前入賬會做大利潤，給財務報表閱讀者一個錯覺，會引致多派股息、花紅、稅收。 財務報表以反映當年正確業績為目標，所以多入或少入都是不當，要予以更正。 希望可以幫到你！