Problem
1. In what circumstances the sale of Treasury securities can be considered an operating activity?
2. Provide some examples of companies that engage in the purchase and sale of Treasury securities as part of their routine operations?
3. What factors would auditors and accounting experts consider when determining whether such transactions should be classified as operating activities?
4. What are the potential consequences for businesses that misclassify transactions, particularly when it comes to estimating liquidity and cash generation capacity?
5. What steps can companies take to ensure that their cash flow statements accurately reflect their financial activities?