True or false?

1) A stock dividend and a cash dividend are similar in that they both reduce total stockholders equity. However, a stock dividend does not affect the statement of cash flows whereas a cash dividend does affect the statement of cash flows.

2) When preparing a statement of cash flows (indirect method), an increase in inventory would result in a deduction from net income.

3) 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.

4) A statement of cash flows would not disclose the purchase of machinery in exchange for a note payable.

5) Under the indirect method, tax expense incurred but unpaid will not affect the statement of cash flows.

6) The primary point of statement of cash flows is to determine the amount that cash changed during the period.

7) Stock warrants and stock options will always dilute earnings per share.