Final answer:
The net cash flow from operating activities is $220, determined by subtracting cash paid for salaries and wages from cash received for services. The net income is also $220 as there are no non-cash items or changes in the period. The indirect method shows no adjustments needed; hence net income is equal to net cash flow from operating activities.
Step-by-step explanation:
Net Cash Flow from Operating Activities
To calculate the net cash flow from operating activities, you sum up all cash transactions related to business operations. In this case, the company sold services for $335 in cash.
However, the company also paid out $115 in salaries and wages, which includes $25 from the previous month and $90 for the current month.
Therefore, the net cash flow from operating activities is calculated as follows:
Cash received from services: $335
Cash paid for salaries and wages: -$115
Net cash flow = $335 - $115 = $220
Net Income
The net income for the month would be the same as the net cash flow from operating activities since there are no non-cash items or additional expenses or revenues to consider. Therefore, the net income is also $220.
Converting Net Income to Net Cash Flow - Indirect Method
The indirect method starts with the net income and adjusts for non-cash expenses, changes in working capital, and non-operational gains and losses to determine net cash flow from operating activities.
Since we have no such adjustments in this scenario, the net income already equals the net cash flow from operating activities, which is $220.