The following events apply to 2011, the first year of operations of ITS Consulting Services:

1. Acquired \(\$ 20,000\) cash from the issue of common stock.

2. Paid \(\$ 12,000\) cash in advance for a one-year rental contract for office space.

3. Provided services for \(\$ 25,000\) cash.

4. Adjusted the records to recognize the use of the office space. The one-year contract started on March 1, 2011. The adjustment was made as of December 31, 2011.

Required

a. Write an accounting equation and record the effects of each accounting event under the appropriate general ledger account headings.

b. Prepare an income statement and statement of cash flows for the 2011 accounting period.

c. Explain the difference between the amount of net income and amount of net cash flow from operating activities.