8) ABC Company purchased equipment that cost $2,000,000 on January 1, 2019. The entire cost was recorded as an expense. The equipment had a ten-year life and a $100,000 residual value. ABC uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2022. ABC is subject to a 30% tax rate.

What is the adjustment to retained earnings at January 1, 2022?

9) On December 31, 2021, Blue, Inc. changed its inventory valuation method to FIFO cost from weighted-average cost for financial statement and income tax purposes. The change will result in a $2,800,000 increase in the beginning inventory at January 1, 2021. Assume a 30% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is _______

10) A declaration of a cash dividend is a financing activity whereas a declaration of stock dividend is ignored on a statement of cash flows. (answer True or False)

11) When preparing a statement of cash flows (indirect method), an increase in prepaid expenses would result in an addition to net income. (answer True or False)