Cash Flows from (Used for) Operating Activities

The net income reported on the income statement for the current year was $132,800. Depreciation recorded on store equipment for the year amounted to $21,900. 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	$51,130		$47,040
Accounts receivable (net)	36,660		34,760
Merchandise inventory	50,060		52,920
Prepaid expenses	5,620		4,470
Accounts payable (merchandise creditors)	47,910		44,500
Wages payable	26,180		29,070

a. Prepare the Cash Flows from (used for) 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.

Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash flows from (used for) operating activities:
Depreciation
Changes in current operating assets and liabilities:
Increase in accounts receivable
Decrease in merchandise inventory
Increase in prepaid expenses
Increase in accounts payable
Decrease in wages payable
Net cash flow from operating activities

b. Cash flows from operating activities differ from net income because it does not use the .....accounting. For example, revenues are recorded on the income statement when ....