Why is it important to disclose certain noncash trans-actions? How should they be disclosed?
6. Diane Hollowell and Terry Parmenter were discussing the format of the statement of cash flows of Snow Candy Co. At the bottom of Snow Candy’s statement of cash flows was a separate section entitled "Noncash investing and financing activities." Give three examples of significant noncash transactions that would be reported in this section.
7. Why is it necessary to use comparative balance sheets, a current income statement, and certain transaction data in preparing a statement of cash flows?
8. 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?