How should a decrease in the prepaid expenses account balance during the period be reflected in the statement of cash flow from operating activities using the indirect method, and why?

• A. The change in the account balance should be added to net income because the net decrease in prepaid expenses did not impact net income but did affect the cash balance.
• B. The change in the account balance should be subtracted from net income because the net decrease in prepaid expenses did not impact net income but did increase the cash balance.
• C. The net change in prepaid expenses should be added to net income to reverse the income statement effect that had no impact on cash.
• D. The net change in prepaid expenses should be subtracted from net income to reverse the income statement effect that had no impact on cash.