1. (TCO 1) What type of accounting information is provided to external users? What type of
accounting information is provided to internal users? (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)
3.
(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)
4.
(TCO 4) What is horizontal analysis of financial statements? How does horizontal analysis differ
from vertical analysis? (Points : 12)
5. (TCO 3) Physical control is a key feature in an internal control system. Why is physical control
such an important internal control? Give an example of physical control as an internal
control. (Points : 24)
6.
(TCO 1) Describe the balance sheet. Why is this statement important to the company, creditors,
and investors? (Points : 24)
7. (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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