Avatar Company uses the indirect method to prepare its statement of cash flows. The treasury stock account had a debit balance of $5,000 at the beginning of the year, and a debit balance of $8,000 at the end of the year. No treasury stock was sold during the year.

The financing section of the statement of cash flows will show a negative cash flow of $3,000 for purchases of treasury stock.

a.Trueb.False