Ch. 1 Critical Thinking Question 5: Answer: Noncash transactions are included in the statement of cash flows because it will affect the decision of financial statement users, internal or external users. Inclusion of noncash transactions in the statement of cash flow can avoid any misinterpretation in reading the statement report and help guide in making the correct decision based from the statement presented. Significant noncash transactions are disclosed below the statement of cash flows with the caption Significant Noncash Investing and Financing Activities.

Chapter 1 Exercise 1:

1. Classification of activities
2. I
3. O
4. F
5. O
6. F
7. O
8. I
9. N.

Chapter 1 Exercise 4:

1. Overview of direct and indirect methods

2. True
3. True
4. False, because the amount...