Reporting Changes in Financial Position

a. Why does the change in cash balance reported in the cash flow statement typically differ from the change in retained earnings reported in the statement of changes in stockholders’ equity?

b. What are the major sources of cash typically used to purchase long-term assets?

c. What are the major sources of cash typically used to retire short-term debt? Long-term debt?

d. Which section(s) of the cash flow statement is (are) reported differently if the direct method is used in preparing the cash flow statement?

e. Are total cash flows for the period computed using the direct method generally larger than, less than, or equal to cash flows computed using the indirect method?

Explain.