Describe the methodology, similarities, and the differences between the direct and indirect methods of preparing the statement of cash flows Be sure to explain the major cash flow categories of operating, investing, and financing activities, and provide at least two examples of each activity. Then, describe the relationship between the beginning cash balance and the ending cash balance for the current period. Lastly, explain the reasons why one method (direct or indirect) is most often used by corporations to report cash flows.

In the context of financial accounting, what is the primary purpose of the statement of cash flows?   A) To provide information about a company's economic resources and claims against those resources.   B) To report the financial position of a company at a specific point in time.   C) To disclose changes in equity during a specific period.   D) To present the cash inflows and outflows of a company's operating, investing, and financing activities during a specific period.

Please explain how to prepare a statement of cash flows (indirect method) including analyzing tables? Please provide an example. Thank you,

Select the item that matches with the description. Descriptions a. Begins with net income and then lists adjustments to net income in order to arrive at operating cash flows. b. Item included in net income, but excluded from net operating cash flows. c. Net cash flows from operating activities divided by average total assets. d. Cash transactions involving lenders and investors. e. Cash transactions involving net income. f. Cash transactions for the purchase and sale of long-term assets. g. Purchase of long-term assets by issuing stock to seller. h. Shows the cash inflows and outflows from operations such as cash received from customers and cash paid for inventory, salaries, rent, interest, and taxes. Terms

Which of the following is not a use of the statement of cash flows? a.Helps creditors analyze the company's operations. b.Provides information about the sources of cash flows. c.Measures how efficiently the company's cash resources are being used. d.Provides insights into the quality and reliability of reported income.

The statement of cash flows is normally a required basic financial statement for each period for which an earnings statement is presented. The statement should include a separate schedule listing the financing and investing activities not involving cash. Required: What are financing and investing activities not involving cash? What are two types of financing and investing activities not involving cash? Explain what effect, if any, each of the following seven items would have on the statement of cash flows. accounts receivable inventory depreciation deferred tax liability issuance of long-term debt in payment for a building payoff of current portion of debt sale of a fixed asset resulting in a loss or gain

Match each of the following term with the corresponding description.  Not all descriptions will be used._____ Operating activities_____ Indirect method_____ Cash equivalent_____ Investing activities_____ Direct method_____ Financing activitiesA. Measures the percent of net income that comes from high-margin products.B. Includes such events as the receipt of dividends and interest on investment assets.C. Includes assets that are very liquid and have original maturities of three months or less.D. The percent of total debt represented by a company's cash account.E. These activities include only purchases made with borrowed funds.F. Where cash flows from operating activities are calculated by converting each revenue and expense item from an accrual to a cash basis.G. This ratio multiplies net income by the average rate of interest the company receives on its investments.H. This ratio uses net income instead of operating cash flow to Analysis a company's ability to finance the cost of its…

Which of the following statements about the direct and indirect methods for presenting Cash Flow Statement is NOT true?  According to the indirect method, cash flows begin with net income or loss and is followed by subsequent additions to or deductions from that amount for non-cash revenue and expense items, resulting in cash flow from operating activities. The direct method is based on use of actual cash inflows and outflows from a company’s operations. Using direct and indirect methods leads to different amounts shown as cash flow from operations, investing, and financing activities. The cash flow statement, income statement and balance sheet are interconnected: the cash flow amount is equal to the corresponding income statement amount plus or minus the change in the related balance sheet account.

There are three sections of the cash flow statement (operating, investing, and financing). In your opinion, discuss which section is the most important and reasons the cash flow statement is different from the cash basis. Defend your position. As an extension of this conversation, discuss ways that the cash flow statement could be manipulated.

On the statement of cash flows prepared by the indirect method, the Cash flows from operating activities section would include   a. receipts from the sale of investments   b. receipts from the issuance of capital stock   c. gains or losses on fixed assets   d. payments for cash dividends