Avatar Company Uses the Indirect Method to Prepare Its Statement

question 81

Multiple Choice

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information: Which of the following statements is accurate regarding the statement of cash flows?

• A)$34,000 will be shown as a positive cash flow in the investing section.
• B)$40,000 will be shown as a positive cash flow in the financing section.
• C)$34,000 will be shown as a positive cash flow in the financing section.
• D)$40,000 will be shown as a negative cash flow in the investing section.

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Definitions:

Real Incomes

Refers to the income of individuals or nations after adjusting for inflation. It represents the purchasing power over goods and services.

Federal Tax Revenues

The income that the federal government receives from taxes, including income taxes, payroll taxes, and other taxation forms, used to fund public services and government operations.

Economy

The system of production, distribution, and consumption of goods and services within a specific geographic region.

Personal Income Tax

A tax levied on the income of individuals, with the rate usually increasing as income increases.