Avatar Company Uses the Indirect Method to Prepare the Cash

question 39

True/False

Avatar Company uses the indirect method to prepare the cash flow statement.Please refer to the following section of the comparative balance sheet:
$\begin{array}{|l|r|r|r|}\hline & {2017} &{2016} &{\text { Increase/decrease }} \\\hline \text { Cash } & \$ 33000 & \$ 18000 & \$ 15000 \\\hline \text { Accounts receivable } & 22000 & 35000 & (13000) \\\hline \text { Inventory } & 170000 & 115000 & 55000 \\\hline \text { Total assets } & \$ 225000 & \$ 168000 & \$ 57000 \\\hline\end{array}$ The change in inventory will be shown as a positive cash flow in the adjustments to Profit.

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Definitions:

Eusocial

Describes a complex social structure in certain species, where there is a division of labor between reproductive and non-reproductive individuals, cooperative care of young, and overlapping generations.

Foraging

The behavior of animals seeking and obtaining food resources in their environment.

Laying Eggs

The process by which female animals produce and deposit eggs into the environment or onto a substrate, a common reproductive strategy in many species.

Selfish Herd

A theory suggesting individuals in a population will position themselves to reduce their own risk from predators by moving towards the center of a group.