Avatar Company Uses the Indirect Method to Prepare the Statement

question 24

Multiple Choice

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

• A)Operating activities minus positive cash flow
• B)Operating activities minus negative cash flow
• C)Financing activities minus positive cash flow
• D)Investing activities minus negative cash flow

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Definitions:

Equity

The principle of fairness and impartiality, often applied in the context of law, finance, and social justice.

Psychological Exchange Theory

A social psychology concept suggesting that interpersonal relationships are formed and maintained based on perceived rewards and costs, mutual benefits, and fairness.

Social Exchange Theory

A theory that suggests human relationships are formed by the use of a subjective cost-benefit analysis and the comparison of alternatives.

Social Contagion

Imitative behavior involving the spread of behavior, emotions, and ideas.