A Manager of One of a Retailer's Several Retail Outlets

question 418

Multiple Choice

A manager of one of a retailer's several retail outlets is stealing cash from cash sales, recording the sales as accounts receivable, and subsequently writing off the fictitious accounts receivable as bad debts. Which of the following comparisons would be most effective in signaling the possibility of such a fraud?

• A) Bad debt expense as a percentage of sales, compared to that of the other outlets.
• B) Bad debt expense as a percentage of sales, compared to that of previous years.
• C) Percentage of past-due accounts receivable, compared to that of the other outlets.
• D) Percentage of past-due accounts receivable, compared to that of previous years.

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