what's the answer ??
Q). 'An enterprise may hold securities and loans for dealing or trading purpose in which case they are similar to inventory acquired specifically for resale'. Is the statement correct ? Cash Flows from such activities will be classified under which type of activity while preparing Cash Flow Statement ?

Open in App

Solution

Dear Student

Yes An enterprise may hold securities and loans for dealing or trading purpose in which case they are similar to inventory acquired specifically for resale if the main business of enterprise is all about trading in such securities .

And we know the transactions related to main business activities are classified as operating activities, therefore, cash flow from such activities shall be classified in operating activities.

Regards

Suggest Corrections

Similar questions

How are the various activities classified (as per AS-3 revised) while preparing cash flow statement?

Under which type of activity will a Trading Company account for cash paid for acquiring shares of another company.

'Interest received and paid' is considered as which type of activity by a finance company while preparing a Cash Flow Statement ?

Join BYJU'S Learning Program