Avatar Company Uses the Indirect Method to Prepare the Cash

question 21

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:
$\begin{array}{|l|r|r|r|} \hline & {2017} &{2016} &{\text { Increase/decrease }} \\\hline \text { Accounts payable } & \$ 4000 & \$ 6000 & \$(2000) \\\hline \text { Accrued liabilities } & 2000 & 1000 & 1000 \\\hline \text { Long-term bills payable } & 84000 & 90000 & (6000) \\\hline \text { Total liabilities } & \$ 90000 & \$ 97000 & \$(7000)\\\hline\end{array}$ The change in accounts payable will be shown as a positive cash flow in the adjustments to Profit.

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Definitions:

Inflation Expectations

The expected pace of future price increases, impacting how individuals choose to save and spend money.

Output

The quantity of goods or services produced in a given time period by a firm, industry, or country.

Inflation Rate

The percentage rate of change in price levels over time, often calculated as the annual rate of increase in the Consumer Price Index (CPI).

Adverse Supply Shock

An unexpected event that suddenly decreases supply, potentially increasing prices and decreasing the quantity available for consumers.