Question: 1. Determine the net cash provided or used by operating activities using the following data: net income, $74,900; decrease in accounts receivable, $4,600; increase in inventory, $11,700; decrease in accounts payable, $1,000; loss on sale of equipment, $3,400; payment of cash dividends, $21,500.
2. Why are expenses such as depreciation and amortization added to net income when cash flow from operating activities is computed by the indirect method?