Craig Corporation's reported net income for 2009 is less than its net cash flow from operating activities. One reason for this could be:
A) The sale of machinery at a loss in 2009.
B) An increase in inventory levels during 2009.
C) The sale of investments at a gain in 2009.
D) An error in the preparation of the statement of cash flows; net income should be greater than or equal to net cash flow from operating activities.

Question

Quizplus · Accepted Answer

The sale of machinery at a loss would decrease net income but not affect cash flow as the cash received from the sale is included in cash flow from investing activities, not operating activities.

Craig Corporation's Reported Net Income for 2009 Is Less Than