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, operating activities, investing activities, and financing activities.
3. How does the direct method differ from the indirect method?
4. What can creditors, investors, and other users learn from an analysis of the cash flow statement?
5. Identify the following as financing activities (F) or investing activities (I):
(a) Purchase of equipment.
(b) Purchase of treasury stock.
(c) Reduction of long-term debt.
(d) Sale of building.
(e) Resale of treasury stock.
(f) Increase in short-term debt.
(g) Issuance of common stock.
(h) Purchase of land.
(i) Purchase of common stock of another firm.
(j) Payment of cash dividends.
(k) Gain on sale of land.
(l) Repayment of debt principal.