Read Decision Case 12-1 (p. 667) and answer questions 1-4.

Decision Case 12-1 Comparing two companies in the same industry: Kelloggs and General Mills.

Refer to the statement of cash flow for both Kelloggs and General Mills for the most recent year and any other pertinent information reprinted at the back of this book.

Required 1. Which method, direct or indirect, does each company use in preparing the Operating Activities section of their statements of cash flows? Explain.

2. By what amount did net cash provided by operating activities increase or decrease from the prior year for each company? What is the largest adjustment to reconcile net income to net cash provided by operating activities for each company?

3. What amount did each company spend during the most recent year to acquire property and equipment? How does this amount compare with the amount that each company spent in the prior year?

4. What is the primary source of financing for each of the two companies? Did either or both companies buy back some of their own shares during the most recent year? If so, what might be some reasons for doing so?