I. Suppose you are a Financial Analyst. The CEO gives you a Cash Flow Statement of two companies and asks you to analyze the condition of these businesses. The Cash Flow Statement of two companies is listed below.

Statement of Cash Flow for the year ended December 31, 2020

	Raynolds Company($)		Computer Services Company ($)
Cash flows from Operating Activities Net Income Adjustments to reconcile Depreciation expenses Loss on disposal (Increase)/Decrease in account receivables Increase in inventory (Increase)/Decrease in prepaid expenses Increase/(Decrease) in account payables Increase/(Decrease) in accrued expenses Net Cash provided by Operating Activities	33,000 2,000 (42,000) (54,000) 2,000 (17,000) 10,000	125,000 (66,000) 59,000	9,000 3,000 25,000 (5,000) (4,000) 16,000 (2,000)	45,000 (42,000) 3,000
Cash Flow from Investing Activities Sales of Land Sale proceed from disposal Purchase of Equipment Net Cash used by Investing Activities	25,000 34,000 (166,000)	(107,000)	(120,000) 4,000 (25,000)	(141,000)
Cash Flow from Financing Activities Redemption of bonds Sale of Common Stock Dividends payment Net cash provided by Financing Activities	(10,000) 130,000 (55,000)	65,000	- 20,000 (29,000)	(9,000)
Net increase/(decrease) in Cash Beginning Cash balance		17,000 37,000		(147,000) 33,000
Ending Cash balance		54,000		(114,000)
Non-cash Investing and Financing Activities Issued Common Stock in exchange for Land Issuance of bonds payable to purchase Land		30,000		110,000

Required:

1. Describe the usefulness of Cash Flow Statement in a 500 words. (10 marks)
2. Contrast the advantages and disadvantages of the direct and indirect methods of preparing the statement of cash flows. Are both methods acceptable? Which method is preferred by the FASB? Which method is more popular? (Write about 500 words) (10 marks)