Which of the following is an example of an off‑book fraud?

• A. Skimming
• B. Cash larceny
• C. Billing schemes
• D. Ghost employee schemes

Answer: (A)

Off-book fraud involves theft that happens before transactions are recorded in the books, so no proper entry is made to reflect the loss. Skimming is a classic example: cash is taken from receipts before it’s posted, so the misappropriation occurs outside the records and reduces cash without an immediate corresponding entry.

In contrast, cash larceny typically happens after funds have been recorded, so the loss shows up in the books as a discrepancy. Billing schemes rely on fake invoices and affect accounts payable records, which means the fraud is documented in the accounting system. Ghost employee schemes also create entries in payroll records for non-existent workers, so those frauds are recorded as well.

So skimming best fits the definition of off-book fraud because the theft occurs before the transaction is recorded.