Avatar Company Uses the Indirect Method to Prepare Its Statement $\quad$

question 84

Multiple Choice

Avatar Company uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Avatar Company
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Comparative Balance Sheet
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ December 31, 2014 and 2013
$\begin{array}{lrrc}\hline&2014&2013& \text { Increase/decrease } \\ \text { Common Stock } & \$ 16,000 & \$ 12,000 & \$ 4,000 \\\text { Retained Earnings} & 113,000 & 74,000 & 39,000 \\\text { Treasury Stock} & (8,000) & (5,000) & (3,000) \\\text {Total equity} & \$121,000& \$81,000 & \$40,000 \\\hline\end{array}$ Note:
1) There was no retirement of stock during the year.
2) There were no sales of treasury stock during the year.
Which of the following statements would be true?"

• A) There was zero net cash flow from transactions involving Common Stock.
• B) There was a negative cash flow of $4,000 from the issuance of Common Stock.
• C) There was a positive cash flow of $4,000 from the issuance of Common Stock.
• D) There was positive cash flow of $16,000 from issuance of Common Stock.

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Definitions:

Minnesota

A state in the Upper Midwest and northern regions of the United States, known for its lakes and forested areas.

Scanner Data

Information collected at the point of sale through barcodes or RFID tags, used for inventory management and consumer behavior analysis.

Business

The practice of making one's living or making money by producing or buying and selling goods or providing services.

Focus Group

A qualitative research method where a group of people are asked about their perceptions, opinions, beliefs, and attitudes towards a product, service, concept, advertisement, idea, or packaging.