If marketable securities increase, then cash should usually decrease by a similar amount, since cash was probably used to purchase the securities. An exception to this occurs when:
A) the company paid through a check.
B) the marketable securities are purchased through a broker.
C) the company incurred debt or traded an asset for the securities.
D) the transaction was not recorded in the books of accounts.

Question

Quizplus · Accepted Answer

If a company incurred debt or traded an asset for marketable securities, then cash would not necessarily decrease by a similar amount. Instead, the company may have acquired the securities without using its own cash reserves.

If Marketable Securities Increase, Then Cash Should Usually Decrease by a Similar