An enterprise may hold securities and loans for dealing or trading purposes in which case they are similar to inventory acquired specifically for resale' Is the statement true? Cash flows from such activities will be classified under which type of activity while preparing 'Cash flow statement'.

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Solution

The statement that 'An enterprise may hold securities and loans for dealing or trading purposes in which case they are similar to inventory acquired specifically for resale' is correct for financial companies.
Cash flows from such activities will be classified under Operating Activities while preparing Cash Flow Statement.

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