Avatar Company Uses the Indirect Method to Prepare the Cash

question 104

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:
$$\begin{array} { | l | r | r | r | } \hline & { \mathbf { 2 0 1 7 } } & { \mathbf { 2 0 1 6 } } & { \text { Increase/decrease } } \\\hline \text { Accounts payable } & \$ 4000 & \$ 6000 & \$ ( 2000 ) \\\hline \text { Accrued liabilities } & 2000 & 1000 & 1000 \\\hline \text { Long-term bills payable } & 84000 & 90000 & ( 6000 ) \\\hline \text { Total liabilities } & \$ 90000 & \$ 97000 & \$ ( 7000 ) \\\hline\end{array}$$
The change in accrued liabilities will be shown as a positive cash flow in the adjustments to Profit.

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Definitions:

RuBP

A five-carbon sugar, ribulose biphosphate, involved in the first step of carbon fixation in the Calvin cycle of photosynthesis.

Mitochondrion Structure

The structure of a mitochondrion, characterized by an outer membrane, an inner membrane folded into cristae, and a matrix containing enzymes for ATP production.

Citric Acid Cycle

A series of chemical reactions used by all aerobic organisms to generate energy through the oxidation of acetate derived from carbohydrates, fats, and proteins into carbon dioxide.

Electron Transport Chain

A series of complexes that transfer electrons from electron donors to electron acceptors via redox reactions and couples this electron transfer with the transfer of protons (H+ ions) across a membrane.