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:

Rate of Return

The profit or deficit incurred on an investment during a designated time, shown as a fraction of the initial investment amount.

Net Income

The profit of a company after all expenses and taxes have been deducted from revenue.

Accounting Break-even

The point at which total revenues exactly equal total explicit costs, leading to neither a profit nor a loss.