Avatar Company Uses the Indirect Method to Prepare Its Statement

question 18

True/False

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following portion of the comparative balance sheet:
$\begin{array}{|l|r|r|r|}\hline&2014 & 2013 & \text { Increase/decrease }\\\hline \text { Common stock } & \$ 30,000 & \$, 000 & \$ 28,000 \\\hline \text { Retained earnings } & 113,000 & 74,000 & 39,000 \\\hline \text { Treasury stock } & (8,000) & (5,000) & (3,000) \\\hline \text { Total equity } & \$ 135,000 & \$ 71,000 & \$ 64,000 \\\hline\end{array}$

Note: Net income for the year was $49,000.
Dividends of $10,000 will be shown as a positive cash flow in the financing section of the statement of cash flows.

---

Definitions:

Flexible

Capable of adapting to new, different, or changing requirements or situations without significant difficulty.

Coercive Messages

Communication that uses threats or forceful tactics to influence the behavior or beliefs of others, often seen in advertising, negotiations, or persuasive contexts.

Softening Up

A strategy used to gradually build support or reduce opposition for a new policy, idea, or change through communication and persuasion.

Friendly Persuasion

The use of positive, non-coercive tactics aimed at convincing others to adopt a viewpoint or take an action.