Reporting and Interpreting Cash Flows from Operating Activities from an Analystâ€™s Perspective (Indirect Method) – Capaz Company completed its income statement and balance sheet for 2012 and provided the following information:Income Statement for 2012Service revenue$53,000ExpensesSalaries$41,000Depreciation7,000Amortization of copyrights20072,375Other expenses9,700$57,900Net loss($4,900)Partial Balance Sheet20122011Accounts receivable$8,000$15,000Salaries payable15,0001,000Other accrued liabilities1,0005,100In addition, Capaz bought a small service machine for $5,000.Required:1. Present the operating activities section of the statement of cash flows for Capaz Company using the indirect method.2. What were the major reasons that Capaz was able to report a net loss but positive cash flow from operations? Why are the reasons for the difference between cash flow from operations and net income important to financial analysts?
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