Which of the following journal entries is most likely a fraudulent journal entry?
A) an entry involving debit to Accounts Receivable and credit to Sales Revenue
B) an adjusting entry involving debit to Sales and credit to Loans to Employees
C) an entry involving debit to Cash and credit to Notes Receivable
D) an adjusting entry involving debit to Depreciation Expense and credit to Furniture

Question

Quizplus · Accepted Answer

A journal entry involving a debit to Sales and credit to Loans to Employees is not a typical or valid transaction as loans to employees do not relate to sales revenue. This is a red flag for fraudulent activity such as embezzlement. The other options are legitimate transactions commonly seen in financial statements.

Which of the Following Journal Entries Is Most Likely a Fraudulent