Krech Corporation's comparative balance sheet appears below:

Comparative Balance Sheet Ending Balance Beginning Balance
Assets:
Current assets:
Cash and cash equivalents $ 31,000 $ 28,000
Accounts receivable 18,000 20,000
Inventory 58,000 56,000
Prepaid expenses 12,000 10,000
Total current assets 119,000 114,000
Property, plant, and equipment 374,000 354,000
Less accumulated depreciation 190,000 165,000
Net property, plant, and equipment 184,000 189,000
Total assets $ 303,000 $ 303,000
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable $ 13,000 $ 9,000
Accrued liabilities 52,000 53,000
Income taxes payable 67,000 69,000
Total current liabilities 132,000 131,000
Bonds payable 76,000 73,000
Total liabilities 208,000 204,000
Stockholders’ equity:
Common stock 28,000 26,000
Retained earnings 67,000 73,000
Total stockholders’ equity 95,000 99,000
Total liabilities and stockholders' equity $ 303,000 $ 303,000

The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and
equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities. Which of the following is correct regarding the operating activities section of the statement of cash flows?

A. The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net incomeB. The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net incomeC. The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net incomeD. The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income