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10 July, 05:40

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

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  1. 10 July, 06:00
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    The correct answer is A net cash outflow from investing activity.

    Explanation:

    An increase in the available-for-sale debt securities account not due to an increase in fair value means there there was a purchase of the available-for-sale debt securities during the period. The essence of the purchase is to generate more trading income, hence, the purchase affects the investing activity section of the cash flows.
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