Avatar Company Uses the Indirect Method to Prepare the Statement

question 29

Multiple Choice

Avatar Company uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: How will the change in Accounts Payable be shown on the statement of cash flows?

• A)as an addition to Net Income
• B)as a deduction from Net Income
• C)as a deduction from investing cash flows
• D)as an addition to operating cash flows

---

Definitions:

Savings

Money that has been set aside and saved, typically in a bank account, for future use or emergencies.

Account

A record summarizing all the transactions pertaining to a single item in the accounting equation.

Monthly

Occurring or being calculated on a monthly basis; often used in the context of payments, interest calculations, or reporting periods.

Compounded Quarterly

An interest calculation method where the accrued interest is added to the principal four times a year, increasing the amount on which future interest is computed.