Curwen Inc. reported net cash flow from operating activities of $169,100 on its

Question

Curwen Inc. reported net cash flow from operating activities of $169,100 on its statement of cash flows for the year ended December 31. The following information reported in the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method: Decrease in income taxes payable Decrease in inventories Depreclation 9,900 Increase in accounts payable Increase in prepaid expenses Increase in accoonts recelivable a. Determine the net income reported by Curwen Inc. for the year ended December 31 6,800 2,700 1,700 ,400 b. Curwen's net income is different than net cash fnow from operating activities. Which of the following could possibly be the reason for such difference? a. Because depreciation expense which has no effect on cash nows from operating activities. b. Changes in current operating assets and liabilities that are added or deducted c. Changes in fixed assets and Rabilities that are added or deducted. d. Gain from sales of investment is included in net income while the sales proceeds are added n operating activities of cash flow statements MacBook Air

Explanation / Answer

1) Calculate net income :

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?

So answer is a) Because depreciation expense which has no effect on cash flow from operating activities

Cash flow from operating activities 169100 Decrease in income tax payable 4000 Decrease in inventories -9900 Depreciation -15200 Gain on sale of investment 6800 Increase in account payable -2700 Increase in prepaid expense 1700 Increase in account receivable 7400 Net income 161200

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