Question: Note: we will focus primarily on the INDIRECT method of preparing the Statement of Cash Flows. It is more commonly used than the direct method.

Note: we will focus primarily on the INDIRECT method of preparing the Statement of Cash Flows. It is more commonly used than the direct method.

(1) What is the principal disadvantage of the direct method and what are the advantages of the indirect method?

(2) Please name the three main sections of the Statement of Cash Flows. After naming all three, please select ONE of them and discuss the types of accounts that would typically be presented in that section.

(3) What is the purpose of the Statement of Cash Flows?

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