Figure 15-1.Master Company's net income last year was $88,000 and cash dividends declared and paid to the company stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below:

-Refer to Figure 15-1. The net cash flows from operating activities last year was
A) $181,000.
B) $150,000.
C) $88,000.
D) $161,000.

Question

Figure 15-1.Master Company's net income last year was $88,000 and cash dividends declared and paid to the company stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below:
 
-Refer to Figure 15-1. The net cash flows from operating activities last year was
A) $181,000. 
B) $150,000. 
C) $88,000. 
D) $161,000.

Quizplus · Accepted Answer

To calculate net cash flows from operating activities, we need to start with net income and adjust for non-cash items and changes in current assets and liabilities. 
Net cash flows from operating activities = Net income + Depreciation expense + Increase in accounts payable – Increase in accounts receivable 
Net cash flows from operating activities = $88,000 + $40,000 + $7,000 - $10,000 = $161,000 
Therefore, the correct answer is option D.