Question

A form of fraud in which the payments made by one customer are systematically applied to the account of another is called:

a. lapping
b. malfeasance
c. pre-posting
d. knitting

Answer 1

Lapping is a form of fraud in which payments made by one customer are systematically applied to the account of another.

Step-by-step explanation:

Lapping is a form of fraud in which payments made by one customer are systematically applied to the account of another. This is typically done to cover up the theft of funds by the person handling the accounts receivable.

For example, let's say a customer A makes a payment of $500 to a company, but instead of being recorded against customer A's account, the payment is recorded against customer B's account. This way, customer B's account balance appears to be correct despite the fact that customer A's payment is missing.