Question

There are many signs of employee inventory theft (workbook page 18). Describe the method of theft indicated by each of the following signs:

a.   An increase in past-due accounts.

b.   Multiple payees with the same mailing address.

c.    Files containing copies of invoices rather than originals.

d.   An unexplained increase in sales returns.

Answer 1

Answer-

a	An increase in past-due accounts.	Entry of Accounts Receivable will not equal the sum of subsidiary accounts receivable balances.
b	Multiple payees with the same mailing address.	Slow collections of accounts receivable or high bad debts write-off.
c	Files containing copies of invoices rather than originals.	Hard copy files contain only duplicate copies not the original copies.
d	An unexplained increase in sales returns.	There is no reconciliation of checking accounts.