Avatar Company Uses the Indirect Method to Prepare the Statement

question 133

Essay

Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following comparative balance sheet for Avatar Company and complete the third column for increases and decreases.
$$\begin{array} { | l | r | r | r | } \hline & { \mathbf { 2 0 1 4 } } & { \mathbf { 2 0 1 3 } } & \text { Increase/decrease } \\\hline \text { Cash } & \$ 33,000 & \$ 18,000 & \\\hline \text { Accounts receivable } & 22,000 & 35,000 & \\\hline \text { Inventory } & 170,000 & 115,000 & \\\hline \text { Total assets } & \$ 225,000 & \$ 168,000 & \\\hline & & & \\\hline \text { Accounts payable } & \$ 4,000 & \$ 6,000 & \\\hline \text { Accrued liabilities } & 2,000 & 1,000 & \\\hline \text { Long-term notes payable } & 84,000 & 90,000 & \\\hline \text { Total liabilities } & \$ 0,000 & \$ 97,000 & \\\hline & & & \\\hline \text { Common stock } & 30,000 & 2,000 & \\\hline \text { Retained earnings } & 113,000 & 74,000 & \\\hline \text { Treasury stock } & ( 8,000 & ( 5,000 & \\\hline \text { Total stockholders' equity } & \$ 135,000 & \$ 71,000 & \\\hline & & & \\\hline \begin{array} { l } \text { Total liabilities and } \\\text { stockholders' } \\\text { equity }\end{array} &\$225,000 &\$168,000 & \\\hline\end{array}$$

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Definitions:

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An illicit agreement between parties to fix the outcome of a bidding process to benefit at least one of the participants.

Cartels

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A phenomenon in auctions where the winning bidder overpays due to overestimation of the item's value.