Question: 1/ Both the direct method and the indirect method of computing net cash flow from operating activities convert accrual-based income statement amounts into cash flows.

1/ Both the direct method and the indirect method of computing net cash flow from operating activities convert accrual-based income statement amounts into cash flows. TRUE/ FALSE

2/ Under the indirect method, when machinery is sold at a gain, the gain is added in the operating section of the statement of cash flows and the cost is added in the investing section. TRUE/FALSE

3/ All of the following are financing activities except: Multiple Choice

* Selling capital stock.

* Lending money.

* Borrowing money.

* Paying dividends.

4/ Free cash flow is computed as net cash flow from operating activities plus cash used to acquire plant assets minus cash paid for dividends. True or False

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