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1. Which of the following would be subtracted from net income using the indirect method?
- A. loss on sale of equipment.
- B. a decrease in accounts payable.
- C. an increase in long-term investments
- D. depreciation expense
2. The acquisition of land by issuing common stock is
- A. a cash transaction that is reported in the investing section in the body of the statement of cash flows.
- B. a noncash transaction that is disclosed in a supplementary schedule attached to the statement of cash flows.
- C. a noncash transaction that is reported in the operating section in the body of the statement of cash flows.
- D. only reported if the statement of cash flows is prepared using the direct method.
3.In general terms, a sound capital investment will earn
- A. back its original capital outlay and provide a reasonable return on the original investment.
- B. back its original capital outlay by the midpoint of its useful life.
- C. back its original capital outlay.
- D. a return greater than existing capital investments
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