Petra received expenses dated the 31st of the month but waited to record them until the next month to help the current month make the income goals. What type of financial statement fraud is Petra committing by waiting to record and dating the expenses in the following month?
A) Capitalization of expenses
B) Expense cutoff
C) Sales cutoff
D) Channel stuffing

Question

Quizplus · Accepted Answer

Petra is committing expense cutoff fraud by manipulating the timing of when expenses are recorded to make the financial performance of the current month appear better than it actually is. This involves delaying the recording of expenses until the next accounting period.

Petra Received Expenses Dated the 31st of the Month but Waited