Period cutoff
Objective: Apply cutoff rules to transactions around period end.
Recommended first: Expense recognition and matching
Cutoff errors put transactions in the wrong period. Common traps: goods received March 31 with a bill dated April 2; services finished March 30 but invoiced April 3; payroll covering days in both months. Use the date of performance or receipt, not the paperwork date.
Cutoff errors are common around month-end because paperwork lags activity. Review deliveries received and services performed in the last few days of the month, and bills and invoices dated in the first few days of the next. Each should be assigned to the period in which the goods or services were received or provided.
Check your work
- Do transactions near month-end land in the period of activity?
- Are late invoices for earlier work accrued?
- Are early bills for next month excluded?
Work completed March 30 is invoiced April 3 for $700. Accrue it in March.
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | $700.00 | |
| Service Revenue | $700.00 |
Common mistakes
✗ Recording by invoice date regardless of when work was done.
✓ Revenue belongs to the period of performance.
Guided practice
Use hints freely here.
Item 1 of 1
Accrue unbilled revenue
At Mar 31, 2026, Harbor Point Consulting has worked 22 hours at $90.00 per hour for a client that will be invoiced in April. Record the adjustment.
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Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 4
Accrue unpaid wages
Corner Bean Café pays wages of $140.00 per working day every Friday. March 31 falls on a Tuesday, so 4 working days have been earned but not paid. Record the adjustment.
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Key terms
- Cutoff
- Recording transactions in the correct period.
References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.