Avatar Auto Parts Company Uses the Indirect Method to Prepare

question 2

Multiple Choice

Avatar Auto Parts Company uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: $\begin{array}{c}\text {Avatar Company}\\ \text {Comparative Balance Sheet}\\\text {December 31, 2017 and 2016}\\\begin{array}{|l|r|r|r|}\hline& 2017 & 2016 & \text { Increase/(Decrease) } \\ \hline\text { Accounts Payable } & \$ 4,000 & \$ 6,000 & \$(2,000) \\\hline \text { Accrued Liabilities } & 2,000 & 1,000 & 1,000 \\\hline \text { Long-term Notes Payable } & \underline{84,00} & \underline{90,000} & \underline{(6,000) } \\\hline \text { Total Liabilities } & \$ 90,00 & \$ 97,000 & \$(7,000) \\\hline\end{array}\end{array}$
How will the change in Accounts Payable be shown on the statement of cash flows?

• A)as an addition to Net Income
• B)as a deduction from Net Income
• C)as a deduction from investing cash flows
• D)as an addition to operating cash flows

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