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

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Definitions:

Factor Endowments

The amount of land, labor, capital, and entrepreneurship that a country or region possesses, which determines its comparative advantage in international trade.

Comparative Advantage

The ability of an individual or entity to produce goods or services at a lower opportunity cost than other producers.

Climate

The long-term pattern of weather conditions in a particular area, including temperature, precipitation, humidity, and seasonal variations.

Technology

The use of scientific understanding to achieve practical goals, particularly within the industrial sector.