Cash Flows from Operating Activities - Indirect Method The net income reported on the income statement for the current year was $93,700. Depreciation recorded on store equipment for the year amounted to $31,200. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year $24,100 $19,700 Cash 65,000 56,000 47,200 50,000 Accounts receivable (net) Inventories Prepaid expenses Accounts payable (merchandise creditors) 3,250 8,000 23,400 17,200 Wages payable 5,300 6,400 a. Prepare the "Cash flows from operating activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments decreases in cash, or any negative adjustments Statement of Cash Flows (partial) Cash flows from operating activities: Net income S 93,700 31,200 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Increase in accounts receivable Increase in inventories Decrease in prepaid expenses EBOOK Show Me How Print Item Increase in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable X Increase in wages payable X Net cash flow from operating activities Feedback Check My Work Compute the increases and decreases in the current asset/liability accounts over the period. Determine what affect these changes would have on cash b. Cash flows from operating activities differs from net income because It does not use the when of accounting. For example revenues are recorded on the income statement Feedback Check My Work Review the definition of accrual accounting, How does this differ with the concept of cash flow payments and receipts? Feed Check My Wort Partially correct Check My Work 2 more Check My Work uses remaining Next