Cash Flows from Operating Activities-Indirect Method The income statement disclosed the following items for year: Depreciation expense $38,300 Gain on disposal of equipment 22,370 Net income 297,100 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $5,970 Inventory (3,400) Prepaid insurance (1,280) Accounts payable (4,050) Income taxes payable 1,280 Dividends payable 890 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 vear ended xoo Previous Next poOD 00 Stement or Cash Fows paroay For the year ended xox Cash flows from operating activities Adjustments to reconcile net income to net cash flow from operating activities Changes in current operating assets and liabilities: accrual basis) Net cash flow from operating activities cash basis tax basis t income? b. Why is net cash flows from operating activities of of accounting, whereas net income is computed using Cash flows from operating activities is based on Previous Next UuICUiU Cash flows from operating adctivities: Adjustments to reconcile net income to net cash flow from operating activities Changes in cuIrent operating assets and liabilities: accrual basis Net cash flow from operating activities cash basis tax dropdown b. Why is net cash flows from operating activities different than net income? of Cash flows from operating activities is based on of accounting, whereas net income is computed using accounting