1. A fellow student says to you: "The statement of cash flows is the easiest of the basic financial statements to prepare because you know the answer before you start. You compare the beginning and ending balances in cash on the balance sheet and compute the net inflow or outflow of cash. What could be easier?" Do you agree? Explain your answer.

2. Which method for preparing the Operating Activities section of the statement of cash flows, the direct or the indirect method, do you believe provides more information to users of the statement? Explain your answer.