Avatar Company Uses the Indirect Method to Prepare Its Statement

question 101

Essay

Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, enter the adjustments needed to record Depreciation Expense for the year of 2014 of $12,000. Panel B-Statement of Cash Flows:
Cash Flows From Operating Activities:
Net Income 49,000
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
Depreciation Expense-Plant
Assets
Gain on Disposal of Plant Assets
Increase/Decrease in Accounts
Receivable
Increase/Decrease in Inventory
Increase/Decrease in Accounts
Payable
Increase/Decrease in Accrued
Liabilities
Net Cash Provided by Operating
Activities
Cash Flows from Investing Activities:
Cash Payment for Acquisition of
Plant Assets
Cash Receipt From Disposal of
Plant Assets
Net Cash Used for Investing
Activities
Cash Flows from Financing
Activities:
Cash Receipt From Issuance of
Notes Payable
Cash Payment of Notes Payable
Cash Receipt from Issuance of
Common Stock
Cash Payment for Purchase of
Treasury Stock
Cash Payment of Dividends
Net Cash Provided by
Financing Activities
Net Increase (Decrease)in Cash
Total

Understand the concept of bank reserves and the difference between required and excess reserves.

Calculate required reserves for a bank based on its demand and time deposits.

Analyze the composition of bank deposits and how they impact reserve requirements.

Apply knowledge of banking regulations related to reserve requirements to solve problems.

---

Definitions:

Denominator Level

In cost accounting, it refers to the base level of activity or volume used to calculate fixed costs per unit.

Standard Hours

The expected amount of time it should take to complete a task or process under normal conditions.

Target Denominator Level

A predetermined level of activity (such as machine-hours or labor-hours) used to allocate fixed overhead costs to individual units of production.

Volume Variance

A metric that measures the difference between the budgeted and actual volume of production or sales, often reflecting changes in demand or efficiency.