ACCT 301 Week 4 Midterm Exam (Set 1)

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1.(TCO 1) Suppose your company sold $25,000 in merchandise to a customer for cash. How does this transaction impact the accounting equation?(Points : 12)

2.(TCO 2) Suppose your company sold $50,000 in merchandise to a customer for cash. How does this transaction impact the accounting equation?(Points : 12)

(TCO 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?(Points : 12)
(TCO 4) What is horizontal analysis of financial statements? How does horizontal analysis differ from vertical analysis?(Points : 12)

1.(TCO 3) 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.(Points : 24)

(TCO 1) Describe the balance sheet. Why is this statement important to the company, creditors, and investors?(Points : 24)
(TCO 4) Name and describe one liquidity ratio. What does this ratio measure? What is the formula for this ratio?(Points : 24)

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