Cameron processed and shipped a large order of soccer balls to A-1 Sporting Goods, a regular customer, late in the fiscal year without a customer order. The sale is recorded in the current year's financial statements even though A-1 returned the soccer balls that they did not order a few days later. When the return was received back, Cameron processed it in the next fiscal year. What type of financial statement fraud has Cameron committed?
A) Sham sales
B) Channel stuffing
C) Sales cutoff
D) Unauthorized shipments

Question

Quizplus · Accepted Answer

Cameron committed a sales cutoff fraud by recording the sale in the current fiscal year and processing the return in the next fiscal year, thereby inflating the current year's sales figures.

Cameron Processed and Shipped a Large Order of Soccer Balls