E4-9. Determining cash from operations and reconciling with accrual net income Requ Requirement 2: Net income was $100,000, while cash flow from operating activities was ($150,000).$30,000 of difference is explained by depreciation, a noncash expense. It reduced net income without having any effect on cash flow. Depreciation caused net income to be $30,000 less than cash flow from operating activities. This effect was more than offset by changes in working capital accounts, which in the aggregate caused operating cash flow to be less than net income by $280,000. When a working capital asset increases (decreases), cash flow from operations is less than (greater than) net income. When a working capital liability increases (decreases), cash flow from operations is greater than (less than) net income. Note: This problem demonstrates that a firm can be profitable under the accrual basis even though it does not generate positive cash flow from operating activities