1.

Recording depreciation:

Select one:

a. decreases retained earning but has no effect on fixed assets.

b. decreases net income but has no effect on cash flows.

c. decreases capital and operating expense.

d. decreases liability and cash flow.

2.

A machine with a useful life of 6 years and a residual value of $3,000 was purchased at the beginning of year 1 for $30,000. The machine was sold for $15,000 on April 1 in year 4.

What is the entry the company would make annually? (which accounts increase, which decrease?)

Select one or more:

a. revenue increase, liability increase

b. asset decrease, revenue decrease

c. expense decrease, asset increase

d. expense increase, asset decrease