Flash Limited had the following cash flows during the reporting period: Purchase of intangibles $80 000
Proceeds from sale of plant $36 000
Receipts from customers $853 000
Payments to suppliers $696 000
Interest received $ 36 500
Income taxes paid $57 000
The net cash flows from operating activities was:
A) $220 000
B) $136 500
C) $187 000
D) $193 500

Question

Quizplus · Accepted Answer

To calculate the net cash flows from operating activities, we need to add back the non-cash expenses (purchase of intangibles) and deduct the non-operating cash items (proceeds from sale of plant) from the cash receipts and payments.

Net cash flows from operating activities = Receipts from customers - Payments to suppliers + Interest received + Purchase of intangibles - Income taxes paid
= $853,000 - $696,000 + $36,500 - $80,000 - $57,000
= $136,500

Therefore, the correct choice is B, with the explanation stated above.

Flash Limited Had the Following Cash Flows During the Reporting