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4 overstate real sales alter contracts inflate

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Unformatted text preview: , accounts receivable © 2003, 2005 by the AICPA 2. Record fictitious sales (related parties, s ham sales, sales with conditions, c onsignment sales, etc.) 3. Recognize revenues too early (improper c utoff, percentage of completion, etc.) 4. Overstate real sales (alter contracts, inflate amounts, etc.) 5. Not record returned goods from c ustomers 6. Record returned goods after the end of t he period 7. Not write off uncollectible receivables 8. Write off uncollectible receivables in a later period 9. Record bank transfers as cash received from customers 10. Manipulate cash received from related parties 11. Not recognize discounts given to c ustomers Overstating Inventory Overstating The second most common way to commit The financial statement fraud is to overstate inventory. inventory. Beginning Inventory Purchases Goods Available for sale Ending Inventory Cost of Goods Sold Income © 2003, 2005 by the AICPA OK OK OK High Low High Inventory/Cost of Goods Sold Frauds Transaction 1. Purchase inventory Acco...
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