MCQs · Q4
Q.Which of the following best describes 'Misappropriation of Goods'?
(a) Recording a cash sale in the books as though it were a cash purchase
(b) The fraudulent theft or diversion of a firm's stock-in-trade by an employee, often concealed by falsely recording the goods as damaged, scrapped, or lost in transit
(c) Overcasting the Sales Book to inflate the firm's reported turnover
(d) A director charging their personal travel expenses to the company's Profit and Loss Account
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Start your 14-day free trial to unlock the full solution →Why (b) is correct: Misappropriation of Goods is one of the two forms of misappropriation (the other being misappropriation of cash). It involves an employee physically stealing or diverting the firm's stock-in-trade, and then covering up the resulting shortage by making a false book entry that offers a plausible-looking reason for the missing quantity — recording the goods as damaged, scrapped, given away as free samples, or lost in transit, when in truth they were simply stolen.
Why the distractors are wrong:
- (a) and (c) describe unintentional-sounding bookkeeping slips (an error of commission/casting), not a deliberate theft of physical assets. …
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