(objective 7-4) Nefret Stores is a large discount cosmetic department store chain.
The company has recently expanded from 5 to 15 stores by borrowing from several large financial institutions and from a public offering of common stock.
A recent investigation disclosed Nefret materially overstated net income
The company understated their accounts payable and recorded fictitious supplier credits that further reduced accounts an Income& Salcs Tax Department investigation was critical of the As result, evidence gathered by Neferet's audit firm, Abdul & El-Emir, in testing accounts payable and the supplier credits.