Question

Why is net income different from net cash from operating activities?

Answer 1

Net Income is the amount calculated after deducting all expenses from income. Expenses can be cash expenses as well as non cash expenses such as depreciation and amortization or expenses incurred in a period but paid later.

It doesn't lead to outflow of cash but it is an expense. All such expenses are accounted for against income but since no cash outflow takes place, it is not accounted for in calculating net cash from operating activities. Similar is the case of incomes earned but not received or incomes received this year which were earned in the previous year.

All cash transactions are accounted for in net cash from operating activities but all cash as well accrued expenses and incomes are accounted for in net income.

That's why there is a difference in net income and net cash from operating activities.