Ace Electronics is a company that sells computers, televisions, home entertainment centers, DVD players, and other electronic equipment. A downturn in the market has caused severe financial problems in the company. In order to fool the auditors as they begin their inventory count, several of Ace's managers have begun stacking empty boxes in the warehouse to create the illusion of extra inventory. This scheme is known as:

Question

Quizplus · Accepted Answer

The scheme described is known as physical padding, which involves creating the illusion of more inventory than actually exists by adding empty boxes, fake labels, or other fraudulent measures. Forced reconciliation involves manipulating accounting records to cover up discrepancies, inventory shuffling involves moving inventory around to hide shortages or overages, and misappropriation of intangible assets involves stealing or diverting assets such as patents or intellectual property.

Ace Electronics Is a Company That Sells Computers, Televisions, Home