Which of the following combinations is a good means to conceal employee fraud but an ineffective means of perpetrating management (financial reporting)fraud?
A) Overstating sales revenue and overstating customer accounts receivable balances.
B) Overstating sales revenue and overstating bad debt expense.
C) Understating interest expense and understating accrued interest payable.
D) Omitting the disclosure information about related-party sales to the president's relatives at below-market prices.

Question

Quizplus · Accepted Answer

Overstating sales revenue and bad debt expense can conceal employee fraud by hiding discrepancies in accounts receivable, but it is less effective for management fraud as it doesn't directly manipulate financial statements to inflate profits.

Which of the Following Combinations Is a Good Means to Conceal