Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

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Multiple Choice

Which of the following is a way by which risk can be diversified?

Ignoring market trends and analysis

Concentrating all investments in a single industry

Relying solely on insider information

Investing in a variety of unrelated assets

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Verified step by step guidance

Understand the concept of diversification: Diversification is a risk management strategy that involves spreading investments across various financial instruments, industries, or other categories to reduce exposure to any single asset or risk.

Analyze the options provided: Evaluate each option to determine whether it aligns with the principle of diversification. For example, ignoring market trends, concentrating investments in one industry, or relying solely on insider information do not reduce risk effectively.

Focus on the correct answer: Investing in a variety of unrelated assets is the key to diversification because it minimizes the impact of poor performance in one asset or industry on the overall portfolio.

Explain why diversification works: Diversification reduces unsystematic risk (specific to individual assets or industries) by ensuring that losses in one area can be offset by gains in another.

Conclude with practical advice: Encourage the practice of building a diversified portfolio by including assets from different industries, geographic regions, and asset classes (e.g., stocks, bonds, real estate) to achieve balanced risk management.