REPORTING NET CASH FLOW FROM OPERATING ACTIVITIES The following information is available for Cornelius Inc.:

Selected Income Statement Information Amount Depreciation expense $11,000 Net income 38,000 Selected Balance Sheet Information Beginning Balance Ending Balance Accounts receivable $21,000 $27,000 Inventory 47,000 43,000 Accounts payable 24,000 32,000 Required:

. Prepare the net cash flows from operating activities using the indirect method.

. Explain why Cornelius was able to report net cash flow from operating activities that was higher than net income. Explain why this is important to financial statement users.

Exercise