Explain why cornelius was able to report net cash flow

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Reference no: EM13943801

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.

Reference no: EM13943801

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