Question

For the current year, a firm reported net income from operations of $20,000 on its income statement and an increase of $30,000 in cash from operations on the statement of cash flows. Explain some likely reasons for the greater increase in cash from operations than net income from operations

Answer 1

If for the current year, a firm reported net income from operations of $20,000 on its income statement and an increase of $30,000 in cash from operations on the statement of cash flows, then the likely reasons for the greater increase in cash from operations than net income from operations may be the decrease in cash of $10,000 as a result of purchasing some inputs, machinery or some other purpose.