According to the 2011 edition of Accounting Trends and Techniques, approximately what percentage of companies use the indirect method to report cash flows provided by operating activities?

2%

33%

98%

67%

In preparing cash flows provided by operating activities using the indirect method, which of the following items is added to net income?

Non-cash expenses such as depreciation.

Decreases in current asset balances.

Gains on investing and financing transactions.

Both non-cash expenses such as depreciation and decreases in current asset balances, but not gains on investing and financing transactions.

A companys prepaid insurance account decreased by $1,000 during the year. Which of the following would appear on the statement of cash flows prepared using the indirect method?

A deduction under investing activities

An addition under investing activities

An addition under operating activities

A deduction under operating activities

Michaels Industries reported net income of $10,000 and paid cash dividends of $2,000. Changes in balance sheet accounts for the year were as follows:

	Increase (Decrease)
Accounts receivable	($5,000)
Inventory	3,000
Property, plant and equipment	15,000
Accumulated depreciation	3,000
Accounts payable	6,000
Accrued liabilities	(2,000)

Based on the above information, what is the amount of net cash provided by operations?

$30,000

$1,000

$14,000

$19,000