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Requirements 1. In comparison to investing and financing activities, it is often said that cash from operating activities must be the main source of cash to achieve long term success of the company. Do you agree or disagree with this statement? In your own words, give reason or reasons to support your answer taking into consideration the possible consequences of the cash being provided by any of the other two activities over the long run. 2. Prepare a complete statement of cash flows for October 2021 using the indirect method based on the information and guidance provided above. Sign Language Hearing Co Ltd Comparative Balance Sheet October 31, 2020, and 2021 2021 2020 320,000 180,000 240,000 350,000 1,090 000 275,000 240,000 220,000 210,000 945,000 Assets Cash and cash equivalent Accounts Receivable Prepaid expenses Equipment, net Total Assets Liabilities Accounts payable Accrued liabilities Bond payable Stockholders' Equity Common Stock Retained earnings Treasury stock Total liabilities and stockholders' equity 305,000 285,000 195,000 285,000 305,000 95,000 95,000 350,000 (140,000) 1.090.000 55,000 255.000 (50,000) 945,000 852,500 Sign Language Hearing Co Ltd Income Statement Year Ended October 31,2021 Revenues and gains: Sales revenue 850,000 Gain on sale of equipment Interest revenue 2,500 Total revenues and gains Expenses Cost of goods sold 465,500 Salary expense 65,500 Depreciation expense 24,000 Rent expense 49,500 Loss on sale of equipment 2.500 Total expenses Income before income taxes Income tax expense Net Profit 607 000 245,500 38,000 207 500 Notes Purchase of equipment Cash receipt from sale of equipment Issuance of bonds payable to borrow cash Cash receipt from issuance of common stock Dividend paid Book value of equipment sold Purchase of treasury stock 243,000 76,500 100,000 40,000 112.500 79,000 90,000

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