Avatar Company Uses the Indirect Method to Prepare the Statement

question 74

Multiple Choice

Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following section of the comparative balance sheet:
$$\begin{array} { | l | r | r | r | } \hline&2014 & 2013 & \text { Increase/decrease }\\\hline \text { Cash } & \$ 33,000 & \$ 18,000 & \$ 15,000 \\\hline \text { Accounts receivable } & 22,000 & 35,000 & ( 13,000) \\\hline \text { Inventory } & 170,000 & 115,000 & 55,000 \\\hline \text { Total assets } & \$ 225,000 & \$ 168,000 & \$ 57,000 \\\hline\end{array}$$
-
How will the change in Inventory be shown on the statement of cash flows?

• A) Operating activities minus positive cash flow
• B) Operating activities minus negative cash flow
• C) Financing activities minus positive cash flow
• D) Investing activities minus negative cash flow

---

Definitions:

Gulf of Mexico

is a large ocean basin near the Southeastern coast of the United States, Mexico, and part of Cuba, known for its rich biodiversity and significant oil deposits.

Treadmill of Production

An environmental sociology theory that suggests economic growth demands corresponding increases in environmental resource extraction and leads to ecological degradation.

Environmental Racism

The disproportionate impact of environmental hazards on minority communities, stemming from policies and practices that discriminate based on race or socioeconomic status.

Kyoto Protocol

An international agreement linked to the United Nations Framework Convention on Climate Change that commits its parties to greenhouse gas emissions reduction targets.