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TRANSACTIONS Sell goods and/or services to customers

ACCOUNTS INVOLVED Accounts Receivable and Revenues (e.g. Sales Revenue)



. $.

&stimate uncollectible receivables Accept returned goods from customers /rite off receivables as uncollectible

'ad (ebts &)pense and Allowance for (oubtful Accounts Sales Returns and Accounts Receivable Allowance for (oubtful Accounts and Accounts Receivable

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0. 2.


3ollect cash after discount period

3ash and Accounts Receivable

4. 15. 11.


3ollect cash within discount period

3ash, Sales (iscounts, and Accounts Receivable

1 .

FRAUD SCHEMES Record fictitious sales (e.g. related parties, sham sales, bill-and-hold sales, sale with side agreements, consignment sales, round tripping, etc.) Recogni!e revenues too earl" (e.g. improper cut-off, holding boo#s open after the close of a reporting period, percentage of completion, etc.) %verstate real sales (e.g. use improper valuation of revenue, alter contracts, inflate amounts, etc.) +nderstate allowance for doubtful accounts, thus overstating receivables -ot record returned goods from customers Record returned goods after the end of the period (on1t write off uncollectible receivables (e.g. re-dating or refreshing transactions) /rite off uncollectible receivables in a later period Record ban# transfers as cash is received from customers 6anipulate cash received from related parties (i.e. lapping) Record fictitious cash entries such as debiting cash and crediting Accounts Receivable -ot record discounts given to customers

Accounts Receivables - mone" owed to a compan" b" its debtors. Sales Revenue - 7n business, revenue or turnover is income that a compan" receives from its normal business activities, usuall" from the sale of goods and services to customers. 7n man" countries, revenue is referred to as turnover. Some companies receive revenue from interest, ro"alties, or other fees. Bad Debts E !ense - An entr" found on a business8s income statement that represents the amount of noncollectable accounts receivable that occurs in a given period. 7n terms of accounting entries, ever" time an amount increases bad debt e)pense, an e9uivalent amount is credited to the business8s allowance for bad debts. Allo"ance #o$ Doubt#ul Accounts - A contra-asset account that records the portion of a compan"8s receivables, which it e)pects ma" not be collected. :he allowance for doubtful accounts is onl" an estimate of the amount of accounts receivable which are e)pected to not be paid. :he actual pa"ment behavior of customers ma" differ substantiall" from the estimate. Sales Retu$ns - :he merchandise given bac# to the seller because of defects. Cas% - :he merchandise given bac# to the seller because of defects. Sales Discounts - A contra revenue account that reports the discounts allowed b" the seller if the customer pa"s the amount owed within a specified time period.