Channel stuffing is a common fraud technique used to increase revenue.

Question

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Channel stuffing involves a company sending its distributors or retailers excessive amounts of products or inventory in order to artificially boost its sales revenue. This allows a company to report higher sales figures, which can be misleading to investors and analysts. It is considered a form of fraud because it creates the appearance of increased demand for a company's products when in reality, the products are not actually being purchased by end consumers.

Channel Stuffing Is a Common Fraud Technique Used to Increase