What best describes the difference between skimming and cash larceny?

• A. Skimming is theft after the books; cash larceny is off-book
• B. Skimming is theft of off-book funds; cash larceny is theft of funds already on the books
• C. Skimming is a check fraud; cash larceny is payroll fraud
• D. Skimming is unrelated to cash theft

Answer: (B)

This question tests understanding of when cash is stolen relative to the accounting records. Skimming happens when cash receipts are taken before they’re recorded in the books, so the theft occurs off the books and the loss isn’t yet reflected in the accounting records. Cash larceny, on the other hand, involves stealing cash that has already been recorded as received, meaning the cash is taken after it has been posted to the accounts and the books show the revenue or cash receipt but the actual cash is missing. Because of that timing difference, the best description is that skimming is theft of off-book funds, while cash larceny is theft of funds already on the books.