The Miniscribe fraud was carried out by which of the following?

• A. Recording nonexistent revenues
• B. Delaying recording expenses
• C. Counting nonexistent product in inventory
• D. All of the above

Answer: (C)

Inventory fraud is at the heart of Miniscribe’s scandal—the company recorded inventory that didn’t exist to inflate the balance sheet. By counting non-existent hard drives as on-hand stock, the asset base appeared stronger than reality, which could also support higher earnings if those fake units were later sold. The fraud wasn’t primarily about recognizing fake revenues or delaying expenses, which is why those options aren’t the main mechanism in this case. In short, Miniscribe’s deception relied on inventing inventory counts to misstate assets.