Because Small Business Owners Often Rely on Informal Procedures for Managing

question 20

True/False

Because small business owners often rely on informal procedures for managing cash, they are most likely to become victims of embezzlement and fraud by their employees.

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Definitions:

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, representing the wear and tear, deterioration, or obsolescence of the asset.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, typically reported on the income statement.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations based on its current income.

Cash Coverage Ratio

A financial metric that measures a company's ability to cover its debt obligations with its operating cash flow.