Final answer:
When an employee takes cash receipts from customers on account, the total cash receipts for the month will be greater than the credit sales for the month. The correct answer is A.
Step-by-step explanation:
When an employee takes cash receipts from customers on account, it means that the customers have made payments towards the amount they owe for purchases made on credit. In this scenario, the total cash receipts from customers for the month would be greater than the credit sales for the month (option D). This is because the cash receipts represent actual payments received, while credit sales represent the total amount of sales made on credit, whether or not the payments have been received yet.
The correct answer is A, where the accounts receivable subsidiary ledger balances are less than the accounts receivable control account, indicative of an employee taking cash receipts without recording the transaction.
The question asks which of the following would be consistent with an employee taking cash receipts from customers on account. The correct answer is:
A. The total of the accounts receivable subsidiary ledger balances is less than the accounts receivable control account.
When cash receipts are misappropriated by an employee (employee theft), the cash is not recorded, while the customer's balance in the accounts receivable subsidiary ledger is reduced. This leads to a situation where the subsidiary ledgers, which reflect the individual balances of customers, total to less than the control account, which is supposed to reflect the total of all individual balances combined. The control account is kept in the general ledger and would still show the original balance prior to the theft since the theft is not recorded there.