Determining Net Income from Net Cash Flow from Operating Activities Curwen Inc. reported net cash flow from operating activities of $357,500 on its statement of cash flows for the year ended December 31. The following information was reported in the “Cash flows from operating activities” section of the statement of cash flows, using the indirect method: Decrease in income taxes payable $7,700 Decrease in inventories 19,140 Depreciation 29,480 Gain on sale of investments 13,200 Increase in accounts payable 5,280 Increase in prepaid expenses 2,970 Increase in accounts receivable 14,300
Determining Net Income from Net Cash Flow from Operating Activities
Curwen Inc. reported net cash flow from operating activities of $357,500 on its statement of
| Decrease in income taxes payable | $7,700 |
| Decrease in inventories | 19,140 |
| 29,480 | |
| Gain on sale of investments | 13,200 |
| Increase in accounts payable | 5,280 |
| Increase in prepaid expenses | 2,970 |
| Increase in |
14,300 |
a. Determine the net income reported by Curwen Inc. for the year ended December 31.
$fill in the blank 1
b. Curwen’s net income is different than net cash flow from operating activities. Which of the following could possibly be the reason for such difference?
- Because depreciation expense which has no effect on cash flows from operating activities.
- Changes in current operating assets and liabilities that are added or deducted.
- Changes in fixed assets and liabilities that are added or deducted.
- Gain from sales of investment is included in net income while the sales proceeds are added in operating activities of cash flow statements.
Net income is presented in the income statement of the company where, expenses are deducted from the revenues.
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