Round-tripping is when
A) a selling company sells to a customer company with huge discounts.
B) a selling company pretends to sell to a fictitious company with the intent of inflating revenues
C) a selling company lends money to a customer company to increase assets.
D) a selling company lends money to a customer company to be used to purchase goods from the selling company.

Question

Quizplus · Accepted Answer

Round-tripping is a fraudulent practice in which a company lends money to a customer company with the understanding that the customer will use the money to purchase goods or services from the lending company. This artificially inflates the revenue and financial metrics of both companies. The lending company then repays the customer company the original loan amount, and the customer company pays back the loan with interest. Ultimately, no real economic value is created, and the purpose is to manipulate financial statements.

Round-Tripping Is When