A firm purchased $20,000 worth of investments classified as securities available for sale. At the end of the year, the investments were worth $23,000. What is the correct presentation of these events in the statement of cash flows prepared under the direct method?
A) Investing cash outflow, $20,000
B) Add $17,000 in reconciliation of earnings and net operating cash flow
C) Investing cash outflow, $20,000; subtract $3,000 in reconciliation of earnings and net operating cash flow
D) No disclosure is needed.
Correct Answer:
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