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Problem 1: Platt Company prepares its statement of cash flows using the indirect method. Indicate whether each of the items below would be added to or deducted from net income to determine net cash flows from operating activities.
Decrease in Inventory
Decrease in Accounts Payable
Depreciation Expense
Increase in Accounts Receivable
Gain on Sale of Land
Increase in Prepaid Rent
Problem 2: True or False - The statement of cash flows explains the difference between net income as shown on the income statement and the net cash flows generated from operations.
Problem 3: True or False - Cash inflows and outflows are not as subject to manipulation as earnings are.
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