1)Because depreciation is not cash-based, it is NOT reported in the direct method of the statement of cash flows.

	True
	False

2) Warranty expense must be estimated and matched to revenues.

True

False

3) Which of the following would be considered part of the cost of machinery and equipment?

Repairs after start-up

Insurance after purchase

Maintenance

Sales taxes

4) Conley Company has a petty cash fund of $300. At the end of the month, $42.38 remains in the fund along with $260.75 in various receipts. The journal entry to replenish the fund would be debit

	Petty Cash for $257.62 and credit Cash for $257.62.
	various expenses, $260.75 and credit Cash for $260.75.
	various expenses, $260.75, credit Cash Over for $3.13, and credit Cash for $257.62.
	various expenses, $254.49, debit Cash Short for $3.13, and credit Cash for $257.62.

5) Allied Industries purchased a piece of equipment for $65,000 with an estimated salvage value of $15,000 on January 1. Its estimated life is five years. To the nearest dollar, what is the equipment's depreciation using double-declining-balance for year two?

	$ 26,000
	$ 12,000
	$ 20,000
	$ 15,600