Carlson Company has the following payments recorded for the current period:
Dividends paid to Carlson shareholders... $150,000
Interest paid on bank loan ......................250,000
Purchase of equipment........................... 350,000
The total amount of the above items to be shown in the operating activities section of Carlson’s statement of cash flows should be

Answer (B) is correct. Cash flows from operating activities include cash flows from all activities not classified as investing or financing. Their effects normally are reported in earnings. Operating cash flows include the payment and collection of interest, dividends paid are a financing cash outflow, and the purchase of equipment is an investing activity. Thus, the total amount to be reported in the operating activities section of the statement of cash flows is $250,000.