The amount reported as (Increase)/decrease in prepaid expenses in the reconciliation section of the statement of cash flows must tie to the difference in prepaid expenses between the previous fiscal year and the current fiscal year as reported on the balance sheet.
For instance, if prepaid expenses at year end for the previous year were $1,100 and at current year-end were $600, $500 must be added back in the reconciliation (since it is a decrease in asset balance).