1) Why are internal controls important in a business? List the fundamental principles of internal control. 2) Eddie works at a clothing store in the mall. He sees that his manager is very busy. At the end of the day, Eddie offers to count the cash in the cash register, deposit it at the bank, and record the accounting journal entries. What is the risk in this situation? Explain using the concept of separation of duties. 3) Using the three components of the fraud triangle, explain why a student may cheat on an exam? 4) What are petty cash receipts? Who signs petty cash receipts?

5) Explain why writing off a bad debt against the allowance account does not reduce the estimated realizable value of a company's account receivable? 6) Why does the Bad Debt Expense account usually not have the same adjusted balance as the Allowance for Doubtful Accounts? 7) Identify and explain the criteria that must be met before recording accounts receivable and revenue?