Question

2 Required information [The following information applies to the questions displayed below.] Part 2 of 2 Sye Chase started and operated a small family architectural firm in Year 1. The firm was affected by two events: (1) Chase provided $19,400 of services on account, and (2) he purchased $3,000 of supplies on account. There were $800 of supplies on hand as of December 31, Year 1. 1.17 points d. Explain why the amounts of net income and net cash flow from operating activities differ. eBook 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. ܘ References

Answer 1

Solution:

The amount of Net income and net cash flow from operating activities differ because although there was 3,000 spent on supplies, there was only $2,200worth of supplies used. The other $800 still remains.

d.

Net Income is $17,200

Net Cash flow from operating activities is $0

$19,400 of revenue was earned on account, but none was collected

$2,200 of supplies were used, but none were paid for

Net income 17,200 = 19400 + 800 - 3000

supplies used = 2200 = 3000 - 800

cash flow = 17200 - 19400 + 3000-800 = 0