Question

Cash collected from customer a is withheld by the cashier, and a subsequent collection from customer b is entered as a credit to customer a's account. customer b's account will not be shown as paid until a collection from customer c is recorded as a credit to customer b. this pattern of fraud is known as____

Answer 1

The pattern of fraud described is known as lapping, where cash collected from one customer is used to cover the funds not deposited from a previous customer.

Step-by-step explanation:

The pattern of fraud described in the question is known as lapping.

Lapping is a fraudulent scheme where cash collected from one customer is used to cover the funds not deposited from a previous customer. This is done by entering a subsequent collection from a new customer as a credit to the account of the previous customer whose payment was withheld. The cycle continues until a collection from another customer is recorded as a credit to the account of the new customer.

For example:

1. Customer A pays $100, but the cashier withholds the money.
2. Customer B pays $200, and the cashier records it as a credit to Customer A's account.
3. Customer C pays $300, and the cashier records it as a credit to Customer B's account.
4. This pattern continues, where each subsequent customer's payment is used to cover the shortfall from the previous customer's payment.