A Bakery Chain Has a Statistical Model That Can Be

question 409

Multiple Choice

A bakery chain has a statistical model that can be used to predict daily sales at individual stores based on a direct relationship to the cost of ingredients used and an inverse relationship to rainy days. What conditions would an internal auditor look for as an indicator of employee theft of food from a specific store?

• A) On a rainy day, total sales are greater than expected when compared to the cost of ingredients used.
• B) On a sunny day, total sales are less than expected when compared to the cost of ingredients used.
• C) Both total sales and cost of ingredients used are greater than expected.
• D) Both total sales and cost of ingredients used are less than expected.

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Definitions:

Long-Term Debt

A type of loan or borrowing that is due for repayment in more than one year.

Tax System

A tax system is the structured framework within which taxes are imposed on individuals, corporations, goods, and services by a government entity.

Equity Financing

A method of raising capital by selling company shares to investors, in exchange for ownership interest.

Debt Financing

The process of raising capital through the sale of bonds, bills, or notes to individual and/or institutional investors.