Question

1.) Why is the statement of cash flows a useful document? 2.) Define the following terms...

1.) Why is the statement of cash flows a useful document?

2.) Define the following terms as they relate to the statement of cash flows: cash flows: cash, operating activities, investing activities, and financing activities.

3.) How does the direct method differ from the indirect method?

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Answer #1

Answer to Question 1.

The Statement of Cash flow is a useful document as it is the only document depicts the Cash flow during a period of time. Whereas other financial statements depicts the income generation and financial position of the corporation and doesn’t reflects the cash flow in various activities.

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