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The following answers point out the key phrases that should appear in students’ answers. They are not intended to be examples of complete student responses. It might be helpful to provide detailed instructions to students on how brief or in-depth you want their answers to be.
145. Identify and briefly describe the three categories of cash flows reported in the statement of cash flows.
146. Distinguish between the indirect method and the direct method for reporting net cash flows from operating activities. Which method is more common in practice? Which method provides a more logical presentation of cash flows?
147. Highland Park Homes reports net income of $300,000, and yet its net cash flow from operating activities is a negative $200,000 during the same period. Is this possible? Explain.
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