Cash Flows from Operating ActivitiesIndirect Method The income statement disclosed the following items for the year: Depreciation expense $34,000 Gain on disposal of equipment 19,830 Net income 244,900 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable Inventory Prepaid insurance Accounts payable (3,010) (1,130) (3,590) 1,130 790 Income taxes payable Dividends payable 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) Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities b. Why is net cash flows from operating activities different than net income? of accounting, whereas net income is computed using of Cash flows from operating activities is based on accounting