Assuming that Sonic Company uses the indirect method for the statement of cash flows, an activity may classified into the categories as follows: a. Operating activity-add to net income b. Operating activity-subtract from net income c. Investing activity-cash inflow d. Investing activity-cash outflow e. Financing activity-cash inflow f. Financing activity-cash outflow g. Noncash transaction An increase in prepaid expenses should be reported as: Operating activity-subtract from net income. Operating activity-add to net income. O Investing activity-cash outflow. Noncash transaction