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) 12) When using the indirect method to prepare the operating section of a statement of cash flows, a gain on the sale of equipment and a loss on impairment of an asset would both be added back as an adjustment to net income. (answer True or False) 13) A statement of cash flows typically would not disclose the effects of an exchange of a truck for machinery. (answer True or False) 14) A stock split is an example of an investing and financing activity. (answer True or False)