Cash Flows from Operating Activities-Indirect Method The net income reported on the income statement for the current year was $144,000. Depreciation recorded on store equipment for the year amounted to $23,800. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year $57,460 41,200 56,250 6,320 53,840 29,420 Beginning of Year $52,860 39,060 59,470 5,020 50,010 32,670 Cash Accounts receivable (net) Inventories Prepaid expenses Accounts payable (merchandise creditors) Wages 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: Net income 144,000 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 23,800 V Changes in current operating assets and liabilities: Net cash flow from operating activities Feedback b. Cash flows from operating activities differs from net income because it does not use the accrual basisof accounting. For example revenues are recorded on the income statement when they are earned