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Jesse Bladecki 2 Insert - Design Document1 - Word Layout References Search Review Mailings View Help 1. Why was the statement of cash flows created by the Financial Accounting Standards Board (FASB)? 2. Describe the three classifications of cash flows, and provide examples of activities that would appear in each classification. 3. Which section of the statement of cash flows is widely regarded as the most important? Why? 7. Why is depreciation expense added back to net income using the indirect method of preparing the statement of cash flows? 9. You have just completed the statement of cash flows for a company, and the bottom of the statement shows a net increase in cash of $425,000. Describe where this increase should be shown elsewhere in the financial statements. 11. How is the operating cash flow ratio calculated, and what does it tell the user? 12. How is the capital expenditure ratio calculated, and what does it tell the user? 13. How is free cash flow calculated, and what does it tell the user? D. Focus -- A AD 2222 9 1. Why was the statement of cash flows created by the Financial Accounting Standards Board (FASB)? 2. Describe the three classifications of cash flows, and provide examples of activities that would appear in each classification. 3. Which section of the statement of cash flows is widely regarded as the most important? Why? 7. Why is depreciation expense added back to net income using the indirect method of preparing the statement of cash flows? 9. You have just completed the statement of cash flows for a company, and the bottom of the statement shows a net increase in cash of $425,000. Describe where this increase should be shown elsewhere in the financial statements. 11. How is the operating cash flow ratio calculated, and what does it tell the user? 12. How is the capital expenditure ratio calculated, and what does it tell the user? 13. How is free cash flow calculated, and what does it tell the user? 9 et 414 words OR D'Focus -- e Use W N