Of the Following Examples of Fraud,which Will Be the Most

question 38

Multiple Choice

Of the following examples of fraud,which will be the most difficult to prevent and detect? Assume the company enforces adequate segregation of duties.

• A) Jim issues credit cards to him and Marie, and when the credit card balances are just under $1,000, Marie writes off the accounts as bad debt. Jim then issues new cards.
• B) An employee puts inventory behind the dumpster while unloading a vendor's delivery truck, then picks up the inventory later in the day and puts it in her car.
• C) A mail room employee steals a check received from a customer and destroys the documentation.
• D) The accounts receivable clerk does not record sales invoices for friends or family, so they can receive free goods.

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Definitions:

Credit Columns

The sections on the right side of accounting ledgers where credit transactions are recorded.

Chart Of Accounts

A systematic listing of all account titles and numbers being used by an organization to track its financial transactions and prepare financial statements.

Ledger

A comprehensive book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type, with debit and credit entries in separate columns and a beginning and ending balance for each account.

Working Paper

Documents prepared by accountants during an audit that summarize the findings and support the final report.