Statement of Cash Flows

1. Differentiate between the direct method and the indirect method by discussing each method. In your opinion, which method provides the most useful information to creditors? Provide support for your rationale

2. Please explain how extraordinary items are recorded in the statement of cash flows and give your opinion on why extraordinary items are not included in the operating section of the statement of cash flow.

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3.Explain how non cash items are reported in the statement of cash flow and give your opinion on if the data is necessary to provide transparent information about a company’s cash flow. Provide support for your rationalization.

4.What is the purpose of the statement of cash flows? What information does it provide? In your opinion, which section is more important to investors?

5. Explain why the reasons for difference between net income and net cash flow from operating activities are useful to investors and creditors.

6.Why is it necessary to convert accrual-based net income to a cash basis when preparing a statement of cash flows?

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