The question seems incomplete but here is a full view of the question.
You receive an anonymous tip that your controller is embezzling assets from your company. You begin your investigation by interviewing several employees in the accounting department, who report no unusual behavior or sudden changes in the suspect's standard of living. One interviewee does report that the controller has gone on a number of extravagant vacations. You perform a net worth analysis, based on a search of public records, and find the following information:
YEAR 1 YEAR 2 YEAR 3
Total assets $80,000 $82,000 $85,000
Total liabilities $40,000 $41,000 $41,000
Net worth $40,000 $41,000 $44,000
Change in net worth $1,000 $3,000
Using expenses $36,000 $36,000
Total income $37,000 $39,000
Less known income $35,000 $35,000 $36,000
Unknown income $2,000 $3,000
Based on the evidence gathered in your search, you should terminate the investigation due to the very low estimate of unknown income.a. True b. False
Answer:
True.
Step-by-step explanation:
Through the public records above, column for unknown income shows a bill of $2,000 in year two and bill of $3,000 in year three. Through the net income column, one can extract that indeed there had been deductions but those deductions might have been put somewhere in the business and might not necessarily mean that your controller has been embezzling funds. The accounting department team indicates that nothing had seemed amiss, meaning that there had been no embezzlement.
In this case, the investigation should be suspended.