Which aspect is a red flag of a fictitious revenue scheme?

A red flag of a fictitious revenue scheme is the presence of uncollected accounts receivable. In such schemes, companies may record revenue that has not actually been earned, which leads to inflated sales figures on financial statements. When there are significant amounts of accounts receivable that remain uncollected, it can indicate that the revenue reported is not supported by actual cash inflow or legitimate transactions.

In a legitimate business operation, one would expect to see a reasonable correlation between sales made and the collection of those sales. High amounts of uncollected accounts receivable can suggest that the reported sales figures are misleading and may indicate that those sales did not occur or occurred without legitimate underlying transactions.

The other options—presence of accounts receivable, sales to legitimate customers, and immediate cash payments—do not inherently indicate fraudulent activity. For instance, having accounts receivable is a normal part of doing business, and selling to legitimate customers is expected in legitimate operations. Immediate cash payments typically suggest the opposite of fictitious revenue since they indicate actual cash transactions. Therefore, uncollected accounts receivable stands out as a significant indicator of potential fraudulent reporting through fictitious revenue.