REPORTING NET CASH FLOW FROM OPERATING ACTIVITIES
The following information is available for Cornelius Inc.:
Selected Income Statement Information Amount
Depreciation expense $11,000
Net income 38,000
|
Selected Balance Sheet Information
Accounts receivable
|
Beginning Balance
$21,000
|
Ending Balance
$27,000
|
|
Inventory
|
47,000
|
43,000
|
|
Accounts payable
|
24,000
|
32,000
|
Required:
1. Prepare the net cash flows from operating activities using the indirect method.
2. Explain why Cornelius was able to report net cash flow from operating activities that was higher than net income. Explain why this is important to financial statement users.