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Sye Chase started and operated a small family architectural firm in Year 1. The firm was affected by two events: (1) Chase provided $21,400 of services on account, and (2) he purchased $4,600 of supplies on account. There were $1,050 of supplies on hand as of December 31, Year 1.

d. Explain why the amounts of net income and net cash flow from operating activities differ.

	Net income is    ; Net Cash Flow from Operating Activities is . of revenue was earned on account, but none was collected; of supplies were used, but none were paid for.

Answer 1

d) Net income = Revenue-expense = 21400-(4600-1050) = 17850

Net cash flow from operating activities = $0

21400 of revenue was earned on account, but none was collected; 3550 of supplies were used, but none were paid for.