Cash Flows from Operating Activities—Indirect Method The net income reported on the income statement for the current year was $131,900. Depreciation recorded on store equipment for the year amounted to $21,800. 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 $51,570 $46,930 Accounts receivable (net) 36,980 34,680 Merchandise inventory 50,490 52,800 Prepaid expenses 5,670 4,460 Accounts payable (merchandise creditors) 48,320 44,400 Wages payable 26,400 29,000 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: Decrease in prepaid expenses $ Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Depreciation Net cash flow from operating activities $ b. 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 .