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.The increase would indicate an investment in the securities.

Question

Quizplus · Accepted Answer

An increase in available-for-sale securities would indicate an investment in the securities and would be classified as a net cash outflow from investing activity in the statement of cash flows using the indirect method. It would not be deducted or added to net income in determining cash flows from operating activities.

In a Statement of Cash Flows Using the Indirect Method