1. Given the following income statement and balance sheet data, select which items would be included in presenting the cash flow from operating activities section of the statement of cash flows using the indirect method:

   Income Statement ($ millions)	2020
   Sales	$40,000
   Less: Cost of goods sold	21,600
   Gross profits	18,400
   Less: Cash operating expenses	12,400
   Less: Depreciation expense	1,100
   Less: Amortization expense	120
   Operating profits (EBIT)	4,780
   Less: Interest expense	300
   Equity in earnings (loss) of affiliate	40
   Gain (loss) on sale of fixed assets	80
   Earnings before tax expense	4,600
   Income tax expense	900
   Net income	$3,700
   Balance Sheet ($ millions)	2020	2019	Change			2020	2019	Change
   Cash & equivalents	$600	$500	$100		Accounts payable	$1,730	$2,050	($320)
   Net receivables	3,500	3,040	$460		Other accrued expenses	2,480	2,050	$430
   Inventories	6,700	6,930	($230)		Short-term debt	270	540	($270)
   Prepaid expenses	750	880	($130)		Other current liabilities	520	480	$40
   Total current assets	11,550	11,350			Total current liabilities	5,000	5,120
   Net property, plant, and equipment	12,220	11,650	$570		Long-term debt	4,680	4,450	$230
   Investments in affiliates	180	160	$20		Deferred taxes	910	870	$40
   Goodwill	840	550	$290		Other long-term liabilities	1,950	2,700	($750)
   Other long-term assets	210	290	($80)		Total stockholders' equity	12,460	10,860	$1,600
   Total assets	$25,000	$24,000			Total liabilities and equity	$25,000	$24,000

   		Add-back depreciation expense of $1,100
   		subtract depreciation expense of $1,100
   		add change in receivables of $460
   		subtract change in receivables of $460
   		add change in inventories of $230
   		subtract change in inventories of $230
   		add change in prepaid expenses of $130
   		subtract change in prepaid expensese of $130
   		add change in accounts payable of $320
   		subtract change in accounts payable of $320
   		add change in accrued expenses of $430
   		subtract change in accrued expenses of $430
   		add change in deferred taxes of $40
   		subtract change in deferred taxes of $40
   		add-back interest expense of $300
   		add gain on sale of fixed assets of $80
   		subtract gain on sale of fixed assets of $80
   		subtract interest expense of $300