Final answer:
The net cash flow from operating activities is $1,300. It is calculated by subtracting cash paid for expenses ($3,600) from the cash collections from customers ($4,900). We don't consider accrued salaries ($1,400) as they are non-cash expenses.
Step-by-step explanation:
To calculate the net cash flow from operating activities, we need to consider all cash inflows and outflows related to the company's primary business activities without considering expenses that don't require an immediate outlay of cash.
Here's how we will calculate it:
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- Cash collections from customers (revenue on account): $5,200
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- Cash paid for expenses: -$3,600
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- Employee salaries accrued (non-cash expense for the period): +$0 (accrued expenses are not a cash outflow)
Therefore, the net cash provided by operating activities is:
$5,200 (revenue collected) - $3,600 (expenses paid) = $1,600
Note that the cash collections were $4,900 and not $5,200 as initially stated. Also, accrued employee salaries do not affect cash flow as they are not paid out yet.
Thus, the correct cash inflow to consider is $4,900, resulting in a net cash flow of $1,300 ($4,900 - $3,600).
Remember, accrued expenses like the employee salaries accrued will be an adjustment in the accrual-based income statement, but it is ignored in cash flow calculations, as we are only concerned with actual cash transactions.