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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