Chapter 12, Problem 9E

Reporting and Interpreting Cash Flows from Operating Activities from an Analyst’s Perspective (Indirect Method)

New Vision Company completed its income statement and balance sheet and provided the following information:

Service Revenue		$66,000
Expenses:
Salaries and Wages	$42,000
Depreciation	7,300
Utilities	6,000
Office	1,700	57,000
Net Income		$ 9,000
Decrease in Accounts Receivable	$12,000
Paid cash for equipment	5,000
Increase in Salaries and Wages Payable	9,000
Decrease in Accounts Payable	4,250

Required:

1. 1. Present the operating activities section of the statement of cash flows for New Vision Com­pany using the indirect method.
2. 2. Of the potential causes of differences between cash flow from operations and net income, which are the most important to financial analysts?