Avatar Company Uses the Indirect Method to Prepare Its Statement

question 57

Multiple Choice

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following portion of the comparative balance sheet: Additional information provided:
Based on the above information only, what amount of net cash flow would be shown in the financing section of the statement of cash flows?

• A)$6,000 negative
• B)$6,000 positive
• C)$5,000 positive
• D)$7,000 negative

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Definitions:

Bonds

Financial securities that represent a loan made by an investor to a borrower, typically corporate or governmental.

Common Stock

A form of corporate equity ownership, a type of security representing ownership in a corporation and a claim on part of the company’s profits.

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to its shareholders in the form of cash.

Operating Activities

Activities that relate directly to the primary business operations, including revenues and expenses, cash flows, and transactions.