1. Compare the purposes of the statement of earnings, the statement of financial position, and the statement of cash flows. 2. What information does the statement of cash flows report that is not reported on the other required financial statements? How do investors and creditors use that information? 3. What are cash equivalents? How are purchases and sales of cash equivalents reported on the statement of cash flows? 4. What are the major categories of business activities reported on the statement of cash flows? Define each of these activities. 5. What are the typical cash inflows from operating activities? What are the typical cash outtlows for operating activities? 6. Under the indirect method, depreciation expense is added to net earnings to compute cash flows from operating activities. Does depreciation cause an inflow of cash? 7. Explain why cash pasd for purchases and salaries during the period is not specifically reported as cash outflows on the statement of cash flows under the indirect method. 8. Explain why a $50,000 increase in inventory during the year must be included in determining cash flows for operating activities under the indirect method