Briefly describe the term "defalcation: and explain how it affects the assets of a company.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Briefly describe the term "defalcation: and explain how it affects the assets of a company.

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What is Defalcation:

The simple meaning of Defalcation is Misappropriation. 

In accounting and auditing terms, Defalcation means theft, misuse, or misappropriation of a company's assets by its internal officials or employees.

In other words, when the internal working person of the company recklessly and intentionally does unethical work with the assets is called defalcation. The various ways of defalcation may be termed as theft, embezzlement,  misappropriation, or misuse.

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