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Review Questions:
1. The chapter listed basic requirements that certain assets must meet before they are capitalized and then expensed. What are they?
2. What is the definition of the following terms?
a. Asset cost
b. Depreciation
c. Depreciation expense
d. Accumulated depreciation
e. Book value
f. Useful life
3. What specific items might be included in the notes to the financial statements?
4. What are the differences between an audit, a review, and a compilation service in the preparation of financial statements?
5. What are the differences between common-size analysis, comparative analysis, and ratio analysis?
6. What are the purposes of the operating activities section, investing activities section, and financing activities section of the statement of cash flows?
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