Question

Laser World's income statement reported total revenues of $910,000 and total expenses (including $43,500 depreciation) of $750,000. The balance sheet reported the following: Accounts Receivable—beginning balance, $60,000 and ending balance, $61,500; Accounts Payable—beginning balance, $26,500 and ending balance, $32,500. Therefore, based only on this information, the net cash flows from operating activities were:

rev: 05_01_2020_QC_CS-210424

Multiple Choice

• $112,300.

• $164,500.

• $208,000.

• $199,150.

Answer 1

• Correct Answer = Option #3: $ 208,000

Net Income ($910000 - 750000)	$160,000
Adjustments:
Depreciation expense	$43,500
Increase in accounts receivables	($1,500)
Increase in accounts payable	$6,000
Net Cash flows from Operating activities	$208,000

No.	Conceptual Notes
1	Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.
2	Effects of Non - Cash Transaction are adjusted from Net Income.
3	Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.
4	Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income
5	Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income