Avatar Company Is Preparing Its Statement of Cash Flows Using $\quad$

question 55

Multiple Choice

Avatar Company is preparing its statement of cash flows using the indirect method. 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
$\begin{array}{lrrc}\hline&2014&2013& \text { Increase/decrease } \\ \text { Accounts Payable } & \$ 4,000 & \$ 6,000 & \$ (2,000) \\\text { Accrued Liabilities} & 2,000 & 1,000 & 1,000 \\\text { Long-Term Notes Payable} & 54,000 & 64,000 & (8,000) \\\text {Total liabilitiest } & 123,000 & 90,000 & 33,000 \\\text { Accumulated Depreciation-Plant and Equipment } & \$62,000& \$71,000 & \$(9,000) \\\hline\end{array}$
Additional information provided by the company includes the following:
1) During 2014, the company repaid $35,000 of Long-Term Notes Payable.
2) During 2014, the company borrowed $27,000 on a new Note Payable.
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) $(8,000)
• B) $8,000
• C) $62,000
• D) $(62,000)

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Definitions:

Long Run

In economics, a period in which all factors of production and costs are variable, allowing all inputs to be adjusted.

Average Variable Cost

The total variable costs of production divided by the quantity of output produced, representing the cost per unit of output.

Total Revenue

The complete sum of funds a company acquires from selling goods or offering services over a specified time period.

Operating Profit

The profit earned from a firm's core business operations, excluding deductions of interest and taxes.