The journal entry testing prescribed by SAS No.99 identifies several common characteristics of fraudulent entries.Which of the following is one such characteristic?
A) an entry for credit sales to a buyer who does not pay his dues on time
B) an entry for repairs and maintenance of plant made every period
C) an entry for creating provisions for bad debts
D) an entry for asset made by the managing director of the company

Question

Quizplus · Accepted Answer

An entry made by the managing director of the company may be a red flag as it could suggest that the individual is trying to manipulate the financial statements for personal gain. This is one of the common characteristics of fraudulent entries identified in SAS No. 99. Entries for credit sales and provisions for bad debts are common and legitimate accounting practices. An entry for repairs and maintenance of plant made every period could be a routine entry and does not necessarily indicate fraud.

The Journal Entry Testing Prescribed by SAS No