In a statement of cash flows using the indirect method,an increase in available-for-sale securities not due to an increase in their fair value should be reported as:
A)A deduction from net income in determining cash flows from operating activities.
B)An addition to net income in determining cash flows from operating activities.
C)A net cash outflow from investing activity.
D)A net cash inflow from investing activity.

Question

Quizplus · Accepted Answer

An increase in available-for-sale securities not due to an increase in their fair value should be reported as a net cash outflow from investing activity as it represents the purchase of additional investment securities. This would not affect the net income calculation and would not be included in determining cash flows from operating activities.

In a Statement of Cash Flows Using the Indirect Method,an