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1. Suppose your company sold $25,000 in merchandise to a customer for cash. How does this transaction impact the accounting equation?
2. Suppose your company sold $50,000 in merchandise to a customer for cash. How does this transaction impact the accounting equation?
3. Rationalization is one of the components of the fraud triangle. What types of rationalization could a person use to justify misconduct? How can a company protect itself from rationalization as a part of fraud?
4. What is horizontal analysis of financial statements? How does horizontal analysis differ from vertical analysis?
5. Separation of duties is a key feature in an internal control system. Why is separation of duties such an important internal control? Give an example of separation of duties as an internal control.
6. Describe the balance sheet. Why is this statement important to the company, creditors, and investors?
7. Name and describe one liquidity ratio. What does this ratio measure? What is the formula for this ratio?
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