A Firm Purchased $20,000 Worth of Investments Classified as Trading

question 43

Multiple Choice

A firm purchased $20,000 worth of investments classified as trading securities.At the end of the year,the investments are worth $23,000.What is the correct disclosure of these events in the statement of cash flows prepared under the direct method?

• A) Operating cash inflow,$3,000
• B) Addition of $17,000 in reconciliation of earnings and net operating cash flow
• C) Operating cash outflow,$20,000;subtract $3,000 in reconciliation of earnings and net operating cash flow
• D) No disclosure is needed.

---

Definitions:

Junk Food

Food containing a high calorie count but lacking in essential nutrients, usually rich in sugar, fat, and sodium.

Binge Eating Disorder

A disorder characterized by recurrent episodes of eating large quantities of food, followed by feelings of shame, distress, or guilt.

Bulimia Nervosa

An eating disorder characterized by periods of binge eating followed by attempts to avoid weight gain, often through vomiting, fasting, or excessive exercise.

Anorexia Nervosa

An eating disorder characterized by an obsession with losing weight, leading to severe undernutrition and an unrealistic perception of body image.