Purchases and sales of securities are always reported as investing activities in a statement of cash flows.

Question

Quizplus · Accepted Answer

Purchases and sales of securities can be classified as either investing activities or operating activities depending on the nature of the business. If the business is engaged in buying and selling securities as its regular course of business (e.g. a securities dealer), then such transactions are reported as operating activities. However, if the business is investing excess cash in securities as a form of investment, then such transactions are reported as investing activities in the statement of cash flows.

Purchases and Sales of Securities Are Always Reported as Investing