Statement of Cash Flows

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Business Finance

Description

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.

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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Explanation & Answer

Attached.

Statement of cash Flows
Thesis statement: The statement of cash flows is a very crucial document in every business. The
following paper is a discussion on various aspects of the statement and includes: •

Difference between the direct method and the indirect method by discussing each method
and the method provides the most useful information to creditors



How extraordinary items are recorded in the statement of cash flows and my opinion on
why extraordinary items are not included in the operating section of the statement of cash
flow.



How noncash 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.



The purpose of the statement of cash flows, the information does it provides and the most
important section to creditors and investors.



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



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


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Statement of cash Flows
Question 1
The main difference...


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