Dear Dr. M. Susan Stiner

Hello, it's good to see you again. How's it going?

In Japan, we still have hot and humid days. It's a bit unusual.

Actually, I don't like hotter temperature.

In my homework,

(Answers)

1.Because American investors respond to changes in cash flows.

Stockholders study cash flows to predict dividends.

Cash flow information helps creditors decide if they will be repaid.

U.S. creditors will not lend funds if they believe they cannot recover

them.

2.Statements made under the direct and indirect methods are more alike

than they are different.

The main difference between the indirect and direct method of developing

cash flow statements is in operating activities.

Indirect method starts with Net Income on the Income Statement.

Cash transactions omitted from income(such as depreciation and amortization,

exchange losses, net, investing and financing losses, net)are included.

Non-cash transactions included in income(trade receivable, inventories, etc)

are removed. This is a "reconciliation" to Net Income.

As no reconciliation necessary, most companies use its method.

This method is not recommended by FASB.

Direct method indepently analyzes each balance sheet account for changes

caused by each transactions. They are displayed on a gross basis.

As companies must show a reconciliation to Net Income in the footnotes if

they use this method, most companies do not use its method.

The amount of cash provided by or used by operating activities is the same

no matter which method is used.

3.The following are quoted from webpages you mentioned last week.

In Japan, funds flow statement, which disclose fund information, are understood

as information outside of financial statements. "Cash flow statement", which

will replace funds flow statements, should be understood as one of financial

statements, because they disclose important information about whole business

activities as do balance sheets and income statements.

Of note, from an international perspective, cash flow statements are placed

as one of financial statements.

Consolidated cash flow statements(or parent-only cash flow statements for

Companies that do not prepare consolidated financial statements) should be

implemented to require for fiscal years beginning on or after April 1, 1999.

Interim consolidated cash flow statements(or interim parent-only cash flow

statements for companies that do not prepare consolidated financial

statements) should be implemented to require for interim periods beginning

on or after April 1, 2000.

Thank you very much for reading them all.

This homework was a little hard work.

I really look forward to your next message, thank you.

Best wishes,