Which of the following is the most common type of fraudulent financial reporting?
A)Capitalizing major overhauls to operating equipment.
B)Deferring service revenue until it is delivered to customers.
C)Including as sales inventory sold with the right to return.
D)Excluding a contingent liability that has been settled.

Question

Quizplus · Accepted Answer

Including as sales inventory sold with the right to return is the most common type of fraudulent financial reporting, also known as "channel stuffing." This involves inflating sales figures by shipping excess inventory to customers who have the option to return it, which can overstate revenue and distort financial statements. The other choices listed may also be forms of fraudulent financial reporting, but they are not as common as channel stuffing.

Which of the Following Is the Most Common Type of Fraudulent