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    Statement of cash flows

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    1. When accrued liability increase from the beginning to the end of the year, it means cash was not expended for some of the company's operating expenses so the increase would be added to net income to convert to cash flow from operating activities under the indirect method.

    True or False

    2. A transaction that does not cause an inflow of cash should be reported on the statement of cash inflows only if it is an adjustment to convert net income on an accrual basis to cash basis?

    True or False

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    Solution Preview

    1. True
    When an expense is incurred and is not paid then the liability would increase. So if the accrued liability increases, it ...

    Solution Summary

    The solution explains two true/false questions relating to statement of cash flows