Avatar Company Uses the Direct Method to Prepare Its Statement

question 7

Multiple Choice

Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following information reported for the year 2014: What amount was paid to suppliers for operating expenses on a cash basis?

• A)$26,000
• B)$20,000
• C)$22,000
• D)$24,000

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Definitions:

Wage

The amount of money that is paid to an employee by an employer, typically in exchange for the employee's labor, calculated on an hourly, daily, or piecework basis.

Value of Marginal Product

The additional revenue generated by employing one more unit of a factor of production, holding all other factors constant.

Profit

The financial gain achieved when the revenue earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Wage

Payment to a worker from an employer for labor or services, usually expressed as an hourly, daily, or piece rate.