Which method of fraud in small businesses involves an employee taking cash from a customer without recording the sale?

The method of fraud involving an employee taking cash from a customer without recording the sale is known as unrecorded sales. This type of fraud occurs when an employee intentionally fails to enter a transaction into the business records. By not recording the sale, the employee can pocket the cash without any record of the transaction, making it difficult for the business owner to detect the theft. This method exploits the trust within the business environment and can lead to significant financial losses if left unchecked.

In this context, the other methods described do not specifically involve the act of not recording a sale. False transactions usually refer to creating fictitious sales to either siphon money or create false records. Check for cash substitution involves replacing a customer's legitimate payment method with a fraudulent one. Mail room theft usually pertains to stealing physical items or documents from the mail room, unrelated to points of sale or cash transactions. Thus, unrecorded sales accurately captures the fraud scenario described in the question.