1. A major advantage of the UCA model over a traditional statement of cash flows is that the UCA model ________.

better isolates the annual capital expenditures

more clearly shows the cash flow effects of changes in the owner’s investment in the business

provides more information about the cash flow impact of sales, gross margin, and operating expenses

adjusts net income for both interest expense and depreciation

2. In an indirect statement of cash flows from operating activities, depreciation expense should be presented as ________.

a cash flow from financing activities

an addition to net income

a deduction from net income

a cash flow from investing activities