Avatar Company Uses the Direct Method to Prepare Its Statement

question 111

Multiple Choice

Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following information reported for the year 2014:
$\begin{array}{lr}\text { Sales revenue: } & \$ 240,000 \\\text { Accounts receivable beginning balance: } & \$ 35,000 \\\text { Accounts receivable ending balance: } & \$ 31,000\end{array}$
In the operating activity section of the statement of cash flows, what amount would be shown for collections from customers?

• A) $244,000
• B) $236,000
• C) $240,000
• D) $258,000

---

Definitions:

Standard Quantity

The expected or predetermined amount of materials or input required to produce a single unit of product.

Standard Price

A predetermined cost assigned to materials, labor, and overhead, used as a benchmark against which the actual costs are compared.

Standard Hours

The predetermined amount of time expected to complete a task or to produce a unit of output under normal conditions.