When an employee who is authorized to make customer entries in the accounts receivable subsidiary ledger purposefully enters cash received into the wrong customer's account, that employee may be suspected of
A) kiting.
B) lapping.
C) floating.
D) shorting.

Question

Quizplus · Accepted Answer

The act of purposefully entering cash received into the wrong customer's account is an indicator of lapping, which is the fraudulent practice of using payments from one customer to cover up a previously misapplied payment from another customer. Kiting is an entirely separate form of fraud involving intentionally inflating bank balances, floating refers to the time period between writing a check and it being presented for payment, and shorting is not related to this scenario.

When an Employee Who Is Authorized to Make Customer Entries