Chapter 1 Review:
3) If a researcher collects data by using the same experimental setup as in
another study, but uses different research subjects, this is called _ the
4) The _ _ is typically represented by the y-axis on a graph.
Chapter 01 Environment and Theoretical Structure of Financial
Accounting Answer Key
True / False Questions
The primary function of financial accounting is to provide relevant financial information to
parties external to business enterprises.
CPA Exam Questions
1. a. $1,406
1. $7,500 x 25% = $1875
2. $5,625 x 25% = $1406
2. b. $7,400
Slovac Company using straight-line depreciation. Year 1 depreciation is $7,400, so
year 2 is $7,400 too.
3. b $1000
$20,000/5,000,000 gallons = $0.004 p
Homework # 10
14. EPS is the amount of income earned by a company expressed on a per share basis.
Company must disclose per share amounts for (1) income before any separately reported
items, (2) each separately reported item, and (3) net income
Homework # 6
1. Cash equivalents are short term, highly liquid investments than can
be readily converted to cash with little risk of loss. For example, money
market funds, treasury bills, and commercial paper are cash
2. Internal co
2a. Straight line
($30,000 - 2,000)/4 yrs = $7,000/yr
2b. Sum of the years digits
Depreciable base ($30, 000 2, 000) = $28,000
$28,000 x 4/10 = $11, 200
$28,000 x 3/10 = $8,400
$28,000 x 2/10 = $5,000
$28,000 x 1/10 = $28
1. Depreciation, depletion and amortization are processes that attempt to satisfy the
matching principle. Depreciation for plant and equipment, depletion for natural resources,
and amortization for intangibles.
We would not record depreciation exp
1. Because of the significant effects on financial position and results of operations of the
depreciation method or methods used, all of the following disclosures shall be made in the
financial statements or in notes thereto:
1. Tangible asset is an asset that has physical existence it can be touched or seen. For
example, building, equipment and office supplies are tangible assets. On the other hand,
intangible asset is an asset that cannot be touched or seen.