Question: Oregon Company disclosed the following information for its recent calendar year.
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Expenses
Salaries expense . . . . . . . . . . . . . . . . . . . . 68,000
Utilities expense . . . . . . . . . . . . . . . . . . . . 28,000
Depreciation expense . . . . . . . . . . . . . . . . 29,200
Other expenses . . . . . . . . . . . . . . . . . . . . 6,800
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (32,000)
Accounts receivable decrease . . . . . . . . . . . $ 28,000
Purchased a machine . . . . . . . . . . . . . . . . . . . 20,000
Salaries payable increase . . . . . . . . . . . . . . . . 26,000
Other accrued liabilities decrease . . . . . . . . 16,000
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?