What occurs when an employee processes a fictitious refund at their register?

What occurs when an employee processes a fictitious refund at their register?

• A. The cash register total is balanced
• B. Inventory is falsely reported as returned
• C. The company experiences a revenue loss
• D. The total cash collected increases

Answer: (B)

When an employee processes a fictitious refund at their register, the correct outcome is that inventory is falsely reported as returned. This occurs because the transaction creates a record that items were returned, leading to an inflated inventory level. In reality, no products were actually returned to the store. The accounting system would reflect these items as back in stock, which distorts the true inventory counts and can lead to further inaccuracies in stock management and financial reporting. As for the other choices, while a fictitious refund might seem to balance the cash register or make it appear that revenue continues to flow, they do not accurately reflect the fraudulent nature of the refund itself. The fictitious nature of the transaction means that it doesn’t lead to a legitimate increase in cash collected or a balanced register. The company also incurs a revenue loss, but the more immediate and direct consequence of processing such a refund is the manipulation of the inventory records. Hence, the primary effect is the false reporting of inventory returns.

When an employee processes a fictitious refund at their register, the correct outcome is that inventory is falsely reported as returned. This occurs because the transaction creates a record that items were returned, leading to an inflated inventory level. In reality, no products were actually returned to the store. The accounting system would reflect these items as back in stock, which distorts the true inventory counts and can lead to further inaccuracies in stock management and financial reporting.

As for the other choices, while a fictitious refund might seem to balance the cash register or make it appear that revenue continues to flow, they do not accurately reflect the fraudulent nature of the refund itself. The fictitious nature of the transaction means that it doesn’t lead to a legitimate increase in cash collected or a balanced register. The company also incurs a revenue loss, but the more immediate and direct consequence of processing such a refund is the manipulation of the inventory records. Hence, the primary effect is the false reporting of inventory returns.