Question 3 (30 marks) Presented below is the income statement of Hongha Ltd for the year ended 31 Dec 2020: Sales $380,000 Cost of goods sold 225.000 Gross profit $155,000 Operating expenses 85,000 Income before income taxes 70,000 Income taxes 28.000 Net income $ 42.000 In addition, the following information related to ne changes in working capital is presented: ALL in $ 31 Dec 2019 31 Dec 2020 Changes Accounts receivable 20,000 35,000 Increased by 15,000 Inventories 31,000 11,600 Decreased by 19,400 Salaries payable (operating 12,000 4,000 Decreased by 8,000 expenses) Accounts payable 8,500 20,500 Increased by 12,000 Income tax payable 31,000 28,000 Decreased by 3,000 The company also indicates that depreciation expense for the year was $16,700. Required: a) Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows using the indirect method. (show all your workings) (8 marks) b) Explain the difference between net income and net cash flows from operating activities. (2 marks) c) Assume you are the manager of business. Is the statement of cash flows necessary for you? Why? (10 marks) d) Which method (direct method or indirect method) do you prefer to prepare cash flows statement? Why? (10 marks)