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B is corrent. When presenting cash flows from operating activities under the indirect approach, net income must be adjusted for changes in current assets (other than cash) and in current liabilities. Further, noncash events must be removed from net income to complete the conversion of net income from an accrual basis to a cash basis. When prepaid expenses decrease, reported expenses exceed cash paid. The decrease in prepaid expenses must therefore be added to net income.
A is incorrect. A decrease in prepaid expenses involves neither an inflow nor an outflow of cash. When presenting cash flows from operating activities under the indirect approach, net income must be adjusted for changes in current assets (other than cash) and in current liabilities. Further, noncash events must be removed from net income to complete the conversion of net income from an accrual basis to a cash basis. When prepaid expenses decrease, reported expenses exceed cash paid. The decrease in prepaid expenses must therefore be added to net income.  
C is incorrect. A decrease in prepaid expenses would not be a deduction from net income. When presenting cash flows from operating activities under the indirect approach, net income must be adjusted for changes in current assets (other than cash) and in current liabilities. Further, noncash events must be removed from net income to complete the conversion of net income from an accrual basis to a cash basis. When prepaid expenses decrease, reported expenses exceed cash paid. The decrease in prepaid expenses must therefore be added to net income.  
D is incorrect. A decrease in prepaid expenses does not involve an outflow of cash. When presenting cash flows from operating activities under the indirect approach, net income must be adjusted for changes in current assets (other than cash) and in current liabilities. Further, noncash events must be removed from net income to complete the conversion of net income from an accrual basis to a cash basis. When prepaid expenses decrease, reported expenses exceed cash paid. The decrease in prepaid expenses must therefore be added to net income.