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7) A stock dividend and a cash dividend are similar in that they both reduce total stockholder's equity. However, a stock dividend does not affect the statement of cash flows whereas a cash dividend does affect the statement of cash flows. (True/False) 8) When preparing a statement of cash flows (indirect method), an increase in inventory would result in a deduction from net income. (True/False) 1 9) When using the indirect method to prepare the operating section of a statement of cash flows, a gain on the sale of land and an increase in notes receivable would both be added back as an adjustment to net income. (True/False) 10) A statement of cash flows would not disclose the purchase of machinery in exchange for a note payable. (True/False)