Describe the 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. When providing the examples, explain the conditions under which cash would increase or decrease. Be specific. For example: Depreciation expense is added (an increase) to net income under the operating activities, indirect method, because depreciation expense decreases net income in the Income Statement (Do NOT use this example).
Describe the relationship between the beginning cash balance and the ending cash balance for the current period.
Explain the reasons why one method (direct or indirect) is most often used by corporations to report cash flows.