Coming Soon
Subscription Marketplace - Buy and sell subscription products and services
571 views
in Articles by
Accounting fraud is a deliberate and improper manipulation of the recording of sales revenue and/or expenses in order to make a company's profit performance appear better than it actually is. Some things that companies do that can constitute fraud are:

--Not listing prepaid expenses or other incidental assets
--Not showing certain classifications of current assets and/or liabilities
--Collapsing short- and long-term debt into one amount.

Over-recording sales revenue is the most common technique of accounting fraud. A business may ship products to customers that they haven't ordered, knowing that those customers will return the products after the end of the year. Until the returns are made, the business records the shipments as if they were actual sales. Or a business may engage in channel stuffing. It delivers products to dealers or final customers that they really don't want, but business makes deals on the side that provide incentives and special privileges if the dealers or customers don't object to taking premature delivery of the products. A business may also delay recording products that have been returned by customers to avoid recognizing these offsets against sales revenue in the current year

The other way a business commits accounting fraud is by under-recording expenses, such as not recording depreciation expense.  Or a business may choose not to record all of its cost of goods sold expense fore the sales made during a period. This would make the gross margin higher, but the business's inventory asset would include products that actually are not in inventory because they've been delivered to customers.

A business might also choose not to record asset losses that should be recognized, such as uncollectible accounts receivable, or it might not write down inventory under the lower of cost or market rule. A business might also not record the full amount of the liability for an expense, making that liability understated in the company's balance sheet. Its profit, therefore, would be overstated.

Please log in or register to reply to this topic.

Related topics

0 replies 3,506 views
posted in Articles by Octopixy
0 replies 971 views
posted in Articles by Sassassin
0 replies 580 views
posted in Articles by Finderpros
0 replies 991 views
posted in Articles by HairyMagpie
0 replies 1,009 views
posted in Articles by ShowDolphin
0 replies 965 views
posted in Articles by FrighteningTwinkles
0 replies 679 views
posted in Articles by LovableStorm
0 replies 660 views
posted in Articles by GiftedWrecker
0 replies 619 views
posted in Articles by AmazingKitty
0 replies 646 views
posted in Articles by Amigod
0 replies 1,014 views
posted in Articles by Cybora
0 replies 535 views
posted in Articles by Prepatriarch
0 replies 562 views
posted in Articles by Knightmare
0 replies 568 views
posted in Articles by VirtualAssassin
0 replies 618 views
posted in Articles by TwinNut
0 replies 596 views
posted in Articles by Hawkward
0 replies 527 views
posted in Articles by FlamboyantChomper
0 replies 583 views
posted in Articles by PlushSeal
0 replies 606 views
posted in Articles by PerfumedNecromancer
0 replies 519 views
posted in Articles by CheeryGrin
0 replies 810 views
posted in Articles by Richard S.
0 replies 573 views
posted in Articles by GardenParrot
0 replies 888 views
posted in Articles by CharmingChamp
0 replies 576 views
posted in Articles by Slayerk
0 replies 658 views
posted in Articles by DreamBaby
0 replies 558 views
posted in Articles by HistoryGuy
0 replies 555 views
posted in Articles by SilentTrooper
0 replies 694 views
posted in Articles by Mosquiche
0 replies 848 views
posted in Articles by GreedySmile
0 replies 622 views
posted in Articles by HairySeahorse
0 replies 918 views
posted in Articles by MagicalCyborg
0 replies 540 views
posted in Articles by Scorpeon
0 replies 654 views
posted in Articles by Tabooccaneer
0 replies 640 views
posted in Articles by Knighthawk
0 replies 614 views
posted in Articles by Knighttime
0 replies 537 views
posted in Articles by SilkPredator
0 replies 540 views
posted in Articles by nicejone
0 replies 546 views
posted in Articles by HairyFoal
0 replies 696 views
posted in Articles by GrizzlyFlash
0 replies 697 views
posted in Articles by VoyageHooper
0 replies 727 views
posted in Articles by BeautifulWolf
0 replies 755 views
posted in Articles by Wallaby
0 replies 694 views
posted in Articles by Falconjurer
0 replies 660 views
posted in Articles by Emufasa
0 replies 702 views
posted in Articles by Celestiger
Connect with us:
...