The following is a list of income statement accounts that must be converted from the accrual basis to the cash basis in order to calculate cash provided (used) by operating activities using the direct method:

Instructions
For each of the above changes in a current asset or current liability account listed beside the related income statement account, identify if
(a) The change should be added to (1) or deducted from (2) the income statement account in order to convert the accrual-based number to a cash-based number; and
(b) The title of the resulting cash receipt or payment on the statement of cash flows. The first one has been done for you as an example?

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Add to (+) or Deduct Change in Current Asset/ Current Liability Account from (-) Income Statement AccountReceipt or Payment Income Statement Related Cash Account 1. Sales revenue 2. Dividend revenue Decrease in dividends receivable 3. Interest revenue Increase in interest receivable 4. Rent revenue 5. Cost of goods sold Increase in merchandise inventory 6. Cost of goods sold Increase in accounts payable 7. Insuranc 8. Salaries expense Increase in salaries payable 9. Interest expense Decrease in interest payable 10. Income tax expense Increase in accounts receivable Cash receipts from customers Increase in unearned rent e expense Inc rease in prepaid insurance Increase in income tax payable