.

Use the following information to answer the next two questions. On January 1, Year 6. Arco Company purchased a computer for $6,500 cash The computer had a $500 salvage value and a four-year useful life. The company earned cash revenue of $2,500 in Year 6 and $3,200 in Year 7. 8. The amount of depreciation expense and the amount of accumulated depreciation Arco would report in the Year 7 financial statements would be $1,500 / $1,500 b. $1,500 / $3,000 $1,625 / $3,000 d. $1.625 / $1.625 a C. 9. a. 10. The amount of cash flow from operating activities in the Year 6 financial statements would be $1.000 b. $(4.000) $2.500 d. none of the above Moe Company paid $12,000 cash in advance for a one-year insurance policy on August 1, Year 3. The company recorded this purchase as prepaid insurance. If the company fails to make the appropriate adjusting entry on December 31, Year 3, which of the following is true? Assets will be overstated by $12,000. b. Assets will be overstated by $7.000. Equity will be understated by $12,000. d. Equity will be overstated by $5.000. a. C