What happens when an employee records a fictitious refund at the cash register?

• A. None of the above
• B. The register total is out of balance with the register log
• C. Inventory is returned to the store
• D. The victim company's inventory is overstated

Answer: (C)

When a fictitious refund is recorded, the system treats it as if merchandise has been returned to stock. The clerk processes a refund to the customer and the records are updated to show the goods back in inventory, even though no actual merchandise has come back. This increases the inventory balance on paper, creating a discrepancy between what’s on hand and what the books show. The core idea is that the fraud makes it appear as though inventory was returned to the store, which is why that option best describes the outcome.