Avatar Company Uses the Indirect Method to Prepare Its Statement

question 98

Multiple Choice

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following portion of the comparative balance sheet:
$$\begin{array} { | l | r | r | r | } \hline&2014 & 2013 & \text { Increase/decrease }\\\hline \text { Common stock } & \$ 30,000 & \$ 2,000 & \$ 28,000 \\\hline \text { Retained earnings } & 113,000 & 74,000 & 39,000 \\\hline \text { Treasury stock } & ( 8,000 & ( 5,000 ) & ( 3,000 ) \\\hline \text { Total equity } & \$ 135,000 & \$ 71,000 & \$ 64,000 \\\hline\end{array}$$

Note: Net income for the year was $49,000.
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How will dividend payments be shown on the statement of cash flows?

• A) Positive $10,000 in the financing section
• B) Negative $10,000 in the financing section
• C) Positive $10,000 in the investing section
• D) Negative $10,000 in the investing section

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Definitions:

Correlation

A quantifiable measure that reflects how closely two or more variables are related in terms of their movements.

Size of The Blaze

The size of the blaze refers to the extent or area that a fire has covered or is covering, denoting the magnitude of the fire incident.

Consumer Price Index

An index measuring the change in the price level of a basket of consumer goods and services purchased by households.

Scatterplot

A type of graph in which the values of two variables are plotted along two axes, the pattern of the points revealing any correlations.