Cash flows from $($used for$)$ operating activities$$indirect method

The income statement disclosed the following items for the year:

Line Item Description Amount

Depreciation expense $$57,600$

Gain on disposal of equipment $33,600$

Net income $508,000$

The changes in the current asset and liability accounts for the year are as follows:

Line Item Description Increase $($Decrease$)$

Accounts receivable $$8,960$

Inventory $(5,120)$

Prepaid insurance $(1,920)$

Accounts payable $(6,080)$

Income taxes payable $1,410$

Dividends payable $2,200$

Question Content Area

a$.$ Prepare the $$Cash flows from $($used for$)$ operating activities$$ 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.

blank

Statement of Cash Flows $($partial$)$

Line Item Description Amount Amount

Cash flows from $($used for$)$ operating activities:

Net income

$Net income

Adjustments to reconcile net income to net cash flows from $($used for$)$ operating activities:

$-$ Select $-$

$-$ Select $-$

Changes in current operating assets and liabilities:

$-$ Select $-$

$-$ Select $-$

$-$ Select $-$

$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

Question Content Area

b$.$ Why is net cash flows from operating activities different than net income?

Cash flows from operating activities is based on fill in the blank $1$ of $2$

of accounting, whereas net income is computed using fill in the blank $2$ of $2$

of accounting.