Cash receipts from sales on account have been misappropriated. Which of the following acts would conceal this defalcation and be least likely to be detected by the auditor?

a. Understating the sales journal.

b. Overstating the accounts receivable control account.

c. Overstating the accounts receivable subsidiary records.

d. Understating the cash receipts journal.

Answer is Option A.

Doing anything with the accounts receivable control account or accounts receivable subsidiary records can easily be verified through obtaining external confirmation from the accounts receivables / debtors therefore, it would not conceal this defalcation.

But when sales journal will be understated, then our total sales will be decreased and then we will having cash collected from accounts receivable + cash sales = sales depicted in sales journal and thus the misappropriation of Cash receipts from sales on account will be hard to discover.