Kane Company completed its income statement and balance sheet for 2006 and provided the following information:

Required: 1. Present the Operating Activities section of the statement of cash flows for Kane Company using the indirect method. 2. What were the major reasons that Kane was able to report a net loss but positive cash flow from operations? Why are the reasons for the difference between cash flow from operations and net income important to financial analysts?

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Service revenue Expenses Salaries Depreciation $42,000 7,000 $50,000 Amortization of copyrights 300 Utilities 7,000 Other expenses 1,700 58,000 Net loss ($ 8.000) Decrease in accounts receivable $12,000 Bought a small service machine 5,000 Increase in salaries payable 9,000 Decrease in other accrued liabilities 4.000