Lesson9

Dear Professor Garreis,

Hello.

Thank you for your reply and corrections of my English.

I will answer your last questions.

The eighth homework
Why is the Statement of Cash Flows important to U.S. users of accounting information?
> The Cash Flow Statement is needed to see if there is healthy cash flow.
And cash flow information helps creditors decide if the borrower can repay the loan.
>>Correct.

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?
> The direct method independently analyzes the changes that cash transactions cause in each balance sheet non-cash account.
The indirect method starts with Net Income on the Income Statement.
Cash transactions omitted from income are added.
Non-cash transactions included in income are removed.
This is called a "Reconciliation to Net Income."
>> Correct.

b. In investing activities?
> No differences.
>> Correct.

c. In financing activities?
> No differences.
>> Correct.

3. How do Japanese companies report their changes in cash during the year?
> The Japanese company reports a change of the cash by cash flow statements.
In Japan, they use indirect method.
>> Correct.

How easy was this lesson for you?
> The accounting was: Very hard.
> The English was: Very hard.
> Getting to and using the linked web pages was: Very hard.

I’m waiting for your reply.

Sincerely,
Yuu.


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