Cash Flows from Operating Activities-Direct Method The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows: Sales $463,110 Cost of goods sold 262,960 Gross profit $200,150 Operating expenses Depreciation expense $35,540 93,950 Other operating expenses 129,490 Total operating expenses Income before income tax $70,660 19,600 Income tax expense $51,060 Net income Changes in the balances of selected accounts from the beginning to the end of the current year are as follows Increase/ Decrease Accounts receivable (net) $(10,260) Inventories 3,570 Prepaid expenses (3,420) (7,300) Accounts payable (merchandise creditors) Accrued expenses payable (operating expenses) 1,020 (2,450) Income tax payable a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments Booker T Industries Inc. Cash Flows from Operating Activities Section For the year ended on June 30 Cash flows from operating activities: Net cash flow from operating activities b. What does the direct method show about a company's cash flows from operating activities that is not shown using the indirect method? With the , the cash received less the cash payments is the net cash flow from operating activities. Individual cash receipts and payments are reported ir the Cash Flows from Operating Activities section. adjusts accrual-basis net income for revenues and expenses that do not involve the receipt or payment of cash to arrive at cash flows from operating activiies