Avatar Company Uses the Indirect Method to Prepare the Cash

question 42

True/False

Avatar Company uses the indirect method to prepare the cash flow statement.Please refer to the following section of the comparative balance sheet:
$$\begin{array} { | l | r | r | r | } \hline &{ \mathbf { 2 0 1 7 } } & { \mathbf { 2 0 1 6 } } &{ \text { Increase/decrease } } \\\hline \text { Cash } & \$ 33000 & \$ 18000 & \$ 15000 \\\hline \text { Accounts receivable } & 22000 & 35000 & ( 13000 ) \\\hline \text { Inventory } & 170000 & 115000 & 55000 \\\hline \text { Total assets } & \$ 225000 & \$ 168000 & \$ 57000 \\\hline\end{array}$$
The change in accounts receivable will be shown as a positive cash flow in the adjustments to Profit.

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