A type of financial statement fraud that is accomplished by shipping more to customers than they ordered, with the expectation that they may return some or all of the items is called:
A) improper shipping recognition.
B) improper sales recognition.
C) channel stuffing.
D) accidental shipping.

Question

Quizplus · Accepted Answer

Channel stuffing is a type of financial statement fraud where a company over-ships or over-supplies their product to a distributor or customer, with the expectation that they will return some or all of it. The company then recognizes the excess shipments as sales, falsely inflating their revenue and profit. This practice is illegal and unethical, and can mislead investors and stakeholders.

A Type of Financial Statement Fraud That Is Accomplished by Shipping