Direct versus Indirect Method For each of the following items, indicate whether it would appear on a statement of cash fl ows prepared using the direct method (D) or the indirect method (I).

______ 1. Net income ______ 2. Increase in accounts receivable ______ 3. Collections on accounts receivable ______ 4. Payments on accounts payable ______ 5. Decrease in accounts payable ______ 6. Depreciation expense ______ 7. Gain on early retirement of bonds ______ 8. Cash sales AppendixLO1