One alternative to preparing the Operating activity section of the Statement of Cash Flows is to use the Indirect Method where Net Cash Flows from operating activity is reconciled from Net Income. In this process, non-cash revenue/expenses, gains/losses are reconciled from Net Income. Below is a list of items. Identify which items need to be reconciled from Net Income in the Statement of Cash Flows by placing an X in the Box. For those items you have Xd, indicate whether they need to be added or subtracted to Net Income to arrive at net cash flow. Remember that these items have ALREADY been included in net income. You are adding or subtracting to/from net income to arrive at the cash flow. This results in adding back expenses/losses and subtracting out revenue/gains that are not cash based.

	X for reconciling items	For Non-Cash items only! added (+) or subtracted (-) to/from Net Income
Patent amortization expense
Gain on sale of Plant Asset
Interest Revenue
Unrealized gain on Trading Securities
Amortization of Discount include in interest expense
Income Tax Expense
Depletion of Natural Resource
Depreciation Expense
Loss on sale of AFSS
Loss on sale of Plant Asset