ACCT 301 WEEK 4 MIDTERM EXAM

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1. (TCO 1) Suppose your company paid $12,000 in cash for its rent. 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) 



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) 



1. (TCO 3) Prenumbered documents are a key feature in an internal control system. Why are prenumbered documents such an important internal control? Give an example of prenumbered documents as an internal control. (Points : 24) 



2. (TCO 1) Describe the statement of cash flows. Why is this statement important to the company, creditors, and investors? (Points : 24) 



3. (TCO 4) Name and describe one profitability ratio. What does this ratio measure? What is the formula for this ratio? (Points : 24)

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