Arundel Company disclosed the following information for its recent calendar year.
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,000
Expenses Salaries expense . . . . . . . . . . . . . . 84,000
Utilities expense . . . . . . . . . . . . . . . . . . . . 14,000
Depreciation expense . . . . . . . . . . . . . . . . 14,600
Other expenses . . . . . . . . . . . . . . . . . . . . 3,400
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (16,000)
Accounts receivable decrease . . . . . . . . . . . $ 24,000
Purchased a machine . . . . . . . . . . . . . . . . . . . 10,000
Salaries payable increase . . . . . . . . . . . . . . . . 18,000
Other accrued liabilities decrease . . . . . . . . 8,000
Required:
1. Prepare the operating activities section of the statement of cash flows using the indirect method.
2. What were the major reasons that this company was able to report a net loss but positive cash flow from operations?
3. Of the potential causes of differences between cash flow from operations and net income, which are the most important to investors?