Each year, our company prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2013 income statement, our company reported $29,000 for insurance expense. It paid $36,000 in insurance premiums during 2013. In its reconciliation schedule, our company should

show a $7,000 positive adjustment to net income under the indirect method for the increase in prepaid insurance. show a $7,000 negative adjustment to net income under the indirect method for the decrease in prepaid insurance. show a $7,000 negative adjustment to net income under the indirect method for the increase in prepaid insurance.