Question

Homework o Required information Exercise 3-10A Recording supplies and identifying their effect on financial statements LO 3-1, 3-3, 3-4 The following information applies to the questions displayed below! Sye Chase started and operated a small family architectural firm in Year 1. The firm was affected by two events in Chase provided $21,300 of services on account, and (2) he purchased $6.200 of supplies on account. There were $900 of supplies on hand as of December 31, Year 1 Exercise 3-10A Part d d. Explain why the amounts of net income and net cash flow from operating activities differ, Net income is Net Cash Flow from Operating Activities is of revenue was earned on account, but none was collected, of supplies were used, but none were paid for

Answer 1

Net Income = Revenue – Cost of goods sold

= 21300-5300

= $16,000

Net cash from operating activities = $0

$21300 revenue earned but not received

$5300 supplies used but not paid

As none of the transactions involved any cash, there will be no cash from operating activities