Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $150,900. Depreciation recorded on store equipment for the year amounted to $24,900. 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 Cash $59,000 $54,280 Accounts receivable (net) 42,300 40,110 Inventories 57,760 61,070 6,490 5,160 Prepaid expenses Accounts payable (merchandise creditors) 55,280 51,350 Wages payable 30,210 33,550 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 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Increase in accounts receivable 0 I 10101 Decrease in inventories Increase in prepaid expenses Increase in accounts payable Net cash flow from operating activities Feedback of accounting. For example revenues are recorded on the income statement b. Cash flows from operating activities differs from net income because it does not use the accrual basis when they are earned