The net income reported on the income statement for the current year was $437,000. Depreciation recorded on store equipment for the year amounted to $17,400. 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	$40,680	$37,320
Accounts receivable (net)	31,350	27,460
Merchandise inventory	40,160	43,640
Prepaid expenses	4,710	3,440
Accounts payable (merchandise creditors)	40,780	37,480
Wages payable	20,890	24,530

Required:

A.	Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.
B.	Briefly explain why net cash flow from operating activities is different than net income.

Amount Descriptions
Amortization of intangible assets
Decrease in accounts payable
Decrease in accounts receivable
Decrease in merchandise inventory
Decrease in prepaid expenses
Decrease in wages payable
Depreciation
Increase in accounts payable
Increase in accounts receivable
Increase in merchandise inventory
Increase in prepaid expenses
Increase in wages payable
Net cash flow from operating activities
Net cash flow used for operating activities
Net income
Net loss

A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

Statement of Cash Flows (partial)

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net income to net cash flow from operating activities:
4
5	Changes in current operating assets and liabilities:
6
7
8
9
10
11

B. Briefly explain why net cash flow from operating activities is different than net income.

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