Fictitious inventory write-off
Definition
A journal entry that reduces the recorded inventory balance under a legitimate category (obsolescence, spoilage, shrinkage) without an actual loss of stock. The recorded reduction either conceals a prior theft or directly generates a credit that the fraudster converts to cash.
Related terms
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- Inflating the value, volume, or classification of sales transactions to generate a larger commission payout. Methods include recording fictitious sales, misclassifying non-commissionable...
- Ghost employee
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- Headcount reconciliation
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- Inventory shrinkage rate
- The ratio of inventory loss (the difference between book inventory and physical count) to total inventory, expressed as a percentage. Comparison of...
- Timesheet fraud
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Explained in
- Payroll and Inventory Fraud SchemesA journal entry that reduces the recorded inventory balance under a legitimate category (obsolescence, spoilage, shrinkage) without an actual loss of stock. Th...