What is cutoff?
submitted by scott

marcosaccounting

In accounting, a cutoff is the process of ensuring that transactions are recorded in the right accounting period. It involves closing the books at the end of an accounting period and making sure that revenues and expenses are recognized in the period when they actually happened.

whynottry

Cutoff means making sure that all sales, purchases, and expenses are recorded in the right period. they do this after the period ends, because they know what did or didn't happen in that time.

It's like picking a stopping point for a certain accounting period, and then going back to make sure everything is included that should be, and that nothing else is included. Doing this regularly helps you avoid big end-of-year surprises, and you don't want an accounting suprise.

billygoat92

Basically, a cutoff is just about making sure stuff gets counted in the right month or year. If you sell something on December 31st, it should show up in December's books, not January's.