Question

Topic: (1) Mr. Bunky Bunkers, President & CEO of Bunkers, Inc. argues that it does not matter which method (direct or indirect) is used in preparing a statement of cash flows. Afterwards, argues Mr. Bunkers, a statement of cash flows is a statement of cash flows. Do you agree with Mr. Bunkers? Explain in detail.

Topic #2: For the current year, Bunkers, Inc. decided to switch from the indirect method to the direct method for reporting cash flows from operating activities on the statement of cash flows. Will the change cause the amount of net cash flow from operating activities to be larger, smaller, or the same as if the indirect method had been used? Explain.

Answer 1

Q (1) Topic (1)

I agree to the statement of Mr. Bunkers that a debt is debt to a great extent but a debt and theses details may vary quite the generally to lot based on the type of borrow that the organization makes. I believe that while borrowing a facility, an organization have to be aware about this type of loan it takes, the amount of loan required, the rate of interest, details of the security, etc. If the loan is a bank loan or financed by a bond payable or by borrowing from a local bank or in the form of a instalment, this organization has to be aware of the circumstances and details required. I have believed that an organization needs to be very much sensitive and serious about such cases so that they do not incur loss by somehow