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

question 97

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) A mail room employee steals a check received from a customer and destroys the documentation.
• B) The accounts receivable clerk does not record sales invoices for friends or family, so they can receive free goods.
• C) 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.
• D) Mike issues credit cards to him and Maxine, and when the credit card balances are just under $1,000, Maxine writes off the accounts as bad debt. Mike then issues new cards.

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Definitions:

Indorsement

The act of signing one's name on the back of a cheque or negotiable instrument, thereby transferring its ownership or altering its terms.

Negotiating the Instrument

Refers to the process of bargaining or discussing the terms of a financial document, such as a check or a bill of exchange, to reach an agreement.

Restricting Payment

Implies conditions or limitations placed on the distribution or release of funds.

Special Indorsement

A signature on a negotiable instrument, such as a check, that specifies the person to whom the instrument is to be payable, thereby restricting further transfer.