Question

The net income for the year for Genesis, Inc. is $750,000, but the statement of cash flows reports that the net cash provided by operating activities is $640,000. What might account for the difference?

Answer 1

Answer:

There are certain adjustments to net income to calculate the operating cash flow.

Since net income is more than operating cash flow, that means that:

Net income includes gain from sale of fixed assets,

It might include unrealized incomes.

The change in current assets might have been positive, as increase in current assets is deducted.

Or that the change in current liabilities is positive that means the current liabilities have decreased and then such decrease will be deducted from net income.