Lesson 12

Dear Yuka,
Thank you for your thirteenth message. My comments follow.
Sincerely,
Prof. Sue Garreis

Dear Professor Garreis,

Thank you for your reply and corrections of my English.

I will answer your last question.

<< Homework >>

1. Why is the Statement of Cash Flows important to U.S. users of accounting information?

　→The investors side;

Stockholders study Cash Flow to predidt dividends and the long-term health of the company.

The creditors side;

U.S. companies do not have a guaranteed source of cash.

U.S. lenders are not required to lend to borrowers.

The borrowers must make the lenders believe that the loan is a good risk.

Cash Flow information helps creditors decide if the borrower can repay the loan.

Therefore, the Statement of Cash Flows important to U.S. users of accounting information.

2. Look at the table that compares the direct and indirect methods.

What is the main difference between the indirect and direct methods:

a. in operating activities? b. in investing activities? c. in financing activities?

　→The main difference between the indirect and direct methods is operating activities.

3. How do Japanese companies report their changes in cash during the year?

　→ In Japan, companies use the Statement of Cash Flows as much as US companies do.
Businesses use the indirect method.

4. How easy was this lesson for you?

　→The accounting was about right.

The English was somewhat hard.

Getting to and using the linked web pages was about right.

I'm waiting for your reply.

Sincerely, yours

Yuka

The new lesson is at