If the Probability a Firm Is Being Embezzled Is 5

question 101

Multiple Choice

If the probability a firm is being embezzled is 5 percent and the estimated potential cost to the firm from embezzlement is $250,000, what is the expected cost of an audit failure?

• A)$25,000
• B)- $15,000
• C)$15,250
• D)$12,500

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Definitions:

Miscellaneous Expense

Small, often irregular costs that do not fit well into other categories of a budget or financial statement.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary accounts’ balances to permanent ones, resetting the temporary accounts for the next period.

Journalized

The process of recording transactions in a company's journal, marking the first step in the accounting process.

End-Of-Period Spreadsheet

A financial statement prepared at the conclusion of an accounting period, summarizing the income, expenses, and adjustments to accounts.