1.Georgia Co. leased an asset to Jack & Jill. using an operating lease in February of Year 1. Georgias statement of cash flows for the year ending December 31, Year 1 will report:

A.A cash outflow from operating activities

B.A cash outflow from investing activities

C.A cash outflow from financing activities

D.A cash inflow from operating activities

2.

During 2021, Jack & Jill Inc. discovered that the ending inventories reported on its financial statements were incorrect by the following amounts:

2019	$200,000 understated
2020	$500,000 understated

Jack & Jill uses the periodic inventory system to ascertain year-end quantities that are converted to dollar amounts using the FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, Jack & Jill's retained earnings at January 1, 2021, would be:

A.$500,000 understated

B.$700,000 overstated

C.$500,000 overstated

D.$300,000 understated

3.Which of the following creates a deferred tax liability?

A.MACRS depreciation in the tax return.

B.Estimated warranty expense.

C.Interest income on municipal bonds.

D.Subscriptions collected in advance.

4.Which of the following should be treated retrospectively?

A.A change in deprecation method.

B.None of these situations require retrospective treatment.

C.A change in the estimate of the allowance for bad debts.

D.A material inventory error discovered in the current accounting period.