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Avatar Company Uses the Indirect Method to Prepare the Statement

Question 137

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Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following section of the comparative balance sheet:
20142013 Increase/decrease  Accounts payable $4,000$6,000$(2,000)  Accrued liabilities 2,0001,0001,000 Long-term notes payable 84,00090,000(6,000)  Total liabilities $90,000$97,000$(7,000) \begin{array} { | l | r | r | r | } \hline&2014 & 2013 & \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 } & 84,000 & 90,000 & ( 6,000 ) \\\hline \text { Total liabilities } & \$ 90,000 & \$ 97,000 & \$ ( 7,000 ) \\\hline\end{array}

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Additional information provided:
During 2014, the company repaid $40,000 of long-term notes payable.
During 2014, the company borrowed $34,000 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) $6,000 negative
B) $6,000 positive
C) $5,000 positive
D) $7,000 negative

Correct Answer:

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