DEFINITION of 'Lapping Scheme'
An accounting method that involves altering the accounts receivable section of the balance sheet when cash that is intended for the payment of a receivable is stolen. The method involves taking the first receivable collected and using that to cover the theft, while the second receivable collected is accounted to the first, the third receivable to the second, and so on.
BREAKING DOWN 'Lapping Scheme'
For example, assume that $100 that was to be used to pay for a receivable is stolen from ZXC Inc. The next receivable ($125) is paid to ZXC a few days later. In a lapping scheme, the first $100 of this second payment will be accounted to the first receivable account, while the remaining $25 will be put toward the second receivable.
A lapping scheme may initially be a convenient way for a company to account for theft, but the firm must eventually account for the theft as a loss and deduct it from net income.

Balance Sheet
A financial statement that summarizes a company's assets, liabilities ... 
Accounting
The systematic and comprehensive recording of financial transactions ... 
Bad Debt
A debt that is not collectible and therefore worthless to the ... 
ChargeOff
A term describing an expense on a company's income statement. ... 
Accounts Receivable  AR
Money owed by customers (individuals or corporations) to another ... 
Accrual Accounting
Accrual accounting is an accounting method that measures the ...

Fundamental Analysis
Measuring Company Efficiency
Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period. 
Markets
How To Analyze A Company's Financial Position
Find out how to calculate important ratios and compare them to market value. 
Fundamental Analysis
Dynamic Current Ratio: What It Is And How To Use It
Learn why this ratio may be a good alternative to the current, cash and quick ratios. 
Economics
Understanding CostVolume Profit Analysis
Business managers use costvolume profit analysis to gauge the profitability of their company’s products or services. 
Fundamental Analysis
5 MustHave Metrics For Value Investors
Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know. 
Fundamental Analysis
5 Basic Financial Ratios And What They Reveal
Understanding financial ratios can help investors pick strong stocks and build wealth. Here are five to know. 
Investing Basics
How to Analyze a Company's Inventory
Discover how to analyze a company's inventory by understanding different types of inventory and doing a quantitative and qualitative assessment of inventory. 
Stock Analysis
Understanding Chipotle's Financials (CMG)
Learn about Chipotle Mexican Grill and its financial statements, including metrics such as comparable sales, operating margin and returns. 
Professionals
A Day In The Life Of A Public Accountant
Here's an inside look at the workdays of two experienced CPAs, to give you an idea of what it might be like to pursue a career as a public accountant. 
Professionals
A Day in the Life of a Public Accountant
There’s no typical day in the life of a public accountant, but one accountant’s experience may shed some light on what the career entails.

What items are considered liquid assets?
A liquid asset is cash on hand or an asset that can be readily converted to cash. An asset that can readily be converted ... Read Full Answer >> 
What is the formula for calculating EBITDA?
When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >> 
What is the formula for calculating the debttoequity ratio?
Expressed as a percentage, the debttoequity ratio shows the proportion of equity and debt a firm is using to finance its ... Read Full Answer >> 
How do I calculate the P/E ratio of a company?
The priceearnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >> 
How do you calculate return on equity (ROE)?
Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >> 
How do you calculate working capital?
Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>