The net cash provided by operating activities in Sosa Company's statement of cash flows for 2015 was $155,000. For 2015, depreciation on plant assets was $45,000, amortization of patent was $8,000, and cash dividends paid on common stock was $54,000. Based only on the information given above, Sosa's net income for 2015 was
A) $155,000.
B) $102,000.
C) $8,000.
D) $156,000.

Question

Quizplus · Accepted Answer

To find the net income, we start with the net cash provided by operating activities and add back any non-cash expenses such as depreciation and amortization. We also subtract any cash outflows that do not affect net income, such as cash dividends paid on common stock. 
Net income = Net cash provided by operating activities + Depreciation + Amortization - Cash dividends paid on common stock
Net income = $155,000 + $45,000 + $8,000 - $54,000
Net income = $154,000 - $54,000
Net income = $100,000 
Therefore, the best choice is B.

The Net Cash Provided by Operating Activities in Sosa Company's