GENERAL KNOWLEDGE

Detailed explanation-1: -Held-for-trading securities are classified as current assets since they will be sold within a year and the cash flows from these securities are considered operating cash flows. Cash flows from held-to-maturity and available for sale securities are cash flows from investing.

Detailed explanation-2: -Then the investor has two options-either to hold this security until it reaches its maturity date or to sell it at a premium when there is a decline in the interest rate. This debt security is called held-to-maturity if the holder chooses to hold it for the entire term till the maturity date.

Detailed explanation-3: -Accounting for Trading Securities Trading securities are recorded in the balance sheet of the investor at their fair value as of the balance sheet date. This type of marketable security is always positioned in the balance sheet as a current asset.

Detailed explanation-4: -Available-for-sale securities (AFS) are debt or equity securities purchased with the intent of selling before they reach maturity. Available-for-sale securities are reported at fair value. Unrealized gains and losses are included in accumulated other comprehensive income within the equity section of the balance sheet.