Multiple Choices (0.5/each, total: 2.5) 1. If the indirect method is used to prepare a statement of cash flows, which of the following would be added to net income to arrive at net cash flows from operating activities? a. Decrease in accrued liabilities. b. Decrease in income taxes payable. c. Decrease in accounts receivable. d. Increase in prepaid expenses. 2. The indirect method of preparing a statement of cash flows a. is the common choice of most companies. b. begins with net income in the operating activities section. c. will produce the same net figure as the direct method. d. All of these choices. 3. Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows. The following transactions occurred during the year: 1. Sold machinery for $9,000 cash. 2. Purchased a building for $80,000 cash. 3. Issued $70,000 worth of stock to acquire an airplane. 4. Converted long-term bonds by issuing $100,000 worth of stock. 5. Declared and paid a $10,000 cash dividend. Transaction 2 would be found on the statement of cash flows in the a. cash flows from operating activities section. b. cash flows from financing activities section. c. cash flows from investing activities section. d. noncash investing and financing transactions