The 20X2 income statement and comparative balance sheets for 20X2 and 20X1, plus two pieces of additional information for Summertime Inc. are given below. Use this information to help you answer the question given below.

Summertime Inc.
Income Statement
For the Year Ended December 31, 20X2
Sales	$320,000
COGS	(180,000)
Gross Profit	140,000
Operating Expenses (includes depreciation of $8,000)	(56,000)
Other Revenue & Expenses and Gains & Losses:
Loss on sale of investments	(4,000)
Income before taxes	88,000
Income tax expense	(26,000)
Net Income	$ 62,000

Summertime Inc.
Balance Sheet
	December 31, 20X2		December 31, 20X1
Assets:
Cash	$189,000		$30,000
A/R	104,000		80,000
Inventory	92,000		95,000
Prepaids	4,000		8,000
Total current assets	389,000		213,00
Long-term investments	0		10,000
Equipment (net)	43,000		38,000
Total Assets	$432,000		$261,000
Liabilities:
A/P	$70,000		$40,000
Accrued Expenses	5,000		6,000
Current portion of long-term debt	0		10,000
Total current liabilities	75,000		56,000
Bonds Payable	45,000		45,000
Total liabilities	120,000		101,000
Common Stock [$1 par value]	40,000		40,000
Preferred Stock [$30 par value]	60,000		0
APIC	140,000		100,000
Treasury Stock [400 shares, at cost]	(8,000)		0
Retained Earnings	80,000		20,000
Total Stockholders Equity	312,000		160,000
Total Liabilities & Stockholders Equity	$432,000		$261,000

Additional information is as follows: (1). Detail related to Equipment is given below:

	12/31/X2	12/31/X1
Equipment	$61,000	$48,000
Less: A/D	(18,000)	(10,000)
Carrying value	43,000	38,000

There were no disposals of equipment in 20X2. (2). A $2,000 dividend was declared and paid in 20X2.

Under the "indirect method" used to compute the net cash flow from operating activities, which one of the following statements is incorrect (false) with respect to the 20X2 statement of cash flows (SCF) for Summertime Inc.?

a. net income is prepared on the accrual basis, and thus adjustments need to be made to net income, such as changes in the current asset accounts, to change to a cash basis

b. depreciation expense is added back to net income in arriving at the net cash flow from operating activities

c. net income is the starting point because it contains revenues and expenses, which are the changes in owners' equity due to operating activities

d. the increase in A/P [accounts payable] would be subtracted from net income in arriving at the net cash flow from operating activities