The following information is available for Cornelius Inc.:
Selected Income Statement Information ____________ Amount
Net income .................................................... $52,000
Depreciation expense ......................................... 11,300
Selected Balance Sheet Information _______ Beginning Balance ______ Ending Balance
Accounts receivable ..................................... $11,500 ................. $17,650
Inventory ................................................... 33,800 .................. 27,825
Accounts payable ......................................... 15,900 ................... 24,600
Required:
1. Compute 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.
3. What could the difference between net income and cash flow from operating activities signal to financial statement users?