Response to the following problem:
Oregon Company disclosed the following information for its recent calendar year.
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Expenses
Salaries expense . . . . . . . . . . . . . . . . . . . . 68,000
Utilities expense . . . . . . . . . . . . . . . . . . . . 28,000
Depreciation expense . . . . . . . . . . . . . . . . 29,200
Other expenses . . . . . . . . . . . . . . . . . . . . 6,800
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (32,000)
Accounts receivable decrease . . . . . . . . . . . $ 28,000
Purchased a machine . . . . . . . . . . . . . . . . . . . 20,000
Salaries payable increase . . . . . . . . . . . . . . . . 26,000
Other accrued liabilities decrease . . . . . . . . 16,000
Required
1. Prepare the operating activities section of the statement of cash flows using the indirect method.
2. What were the major reasons that this company was able to report a net loss but positive cash flow from operations?
3. Of the potential causes of differences between cash flow from operations and net income, which are the most important to investors?