Answer:
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.
An increase in the available-for-sale debt securities account not due to an increase in fair value should be reported as A. A deduction from net income in determining cash flows from operating activities.
It should be noted that available-for-sale securities are debt or equity securities that are purchased with the intent of selling before they reach maturity. Available-for-sale securities are reported at fair value,
It should be noted that an increase in the available-for-sale debt securities account not due to an increase in fair value simply to a scenario where there is a purchase of the available-for-sale debt securities during a particular period.
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