1. Christmas Corporation issued a 20% stock dividend on 40,000 outstanding shares of $10 par value common stock. The distribution was made at the time the market value of the stock was $32 a share. How did this transaction affect the company's total stockholders' equity?

A. The total balances in equity accounts increased by $80,000. B. The sum of the balances in equity accounts increased by $256,000. C. The sum of the balances in equity accounts decreased by $256,000. D. Total stockholders' equity was not affected by this transaction.

2. During the year, Timberdale Company sold a truck at a loss of $20,000. On the Statement of Cash Flows,

1. the loss from the sale of truck is added to net income in the cash flow from financing activities.
2. the loss from the sale of truck is deducted from net income in the cash flow from operating activities.
3. the loss from the sale of truck is deducted from net income in the cash flow from investing activities
4. the loss from the sale of truck is added to net income in the cash flow from operating activities.

3. Regarding the Statement of Cash Flows, which one of the following is false?

1. If accounts receivable decreases, cash increases.
2. If accounts payable decreases, cash increases.
3. If inventory decreases, cash increases.
4. If accounts payable decreases, cash decreases.