Cash Flows from Operating Activities-Indirect Method The income statement disclosed the following items for year: Depreciation expense $41,800 Gain on disposal of equipment 24,400 Net income 337,700 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $6,510 Inventory (3,710) Prepaid insurance (1,390) Accounts payable (4,420) Income taxes payable 1,390 Dividends payable 980 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 out flows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) For the year ended xxx Cash flows from operating activities: Net Income 337,700 Adjustments to reconcile net income to net cash flow from operating activities: Il Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: TIIII II Net cash flow from operating activities Feedback Check My Wor Compute the increases and decreases in the current asset/liability accounts over the period. What affect would these changes have on cash? Leaming Objective 1. Learning Objective 2 b. Why is net cash flows from operating activities different than net income? of accounting, whereas net income is computed using of accounting Cash flows from operating activities is based on Chuck My Work