why sale of investment by a finance company is classified as operating activities and by non finance company is classified as investing expenses???
Hi Diksha
Consider an example of 'Sale of securities' by:
1. Mutual Fund
2. Noodles manufacturing company
The main activity of a mutual fund is buying and selling of securities in the market. So, when securities are sold off by such a financing company, it will be considered as an operating activity for them.
However, for a noodles manufacturing company, producing and selling noodles will be considered as the hard cord activity. If they purchase or sale securities, it will be treated as their investing activity (since it is made for investment purpose).
Hope this clarifies your doubt!!
Consider an example of 'Sale of securities' by:
1. Mutual Fund
2. Noodles manufacturing company
The main activity of a mutual fund is buying and selling of securities in the market. So, when securities are sold off by such a financing company, it will be considered as an operating activity for them.
However, for a noodles manufacturing company, producing and selling noodles will be considered as the hard cord activity. If they purchase or sale securities, it will be treated as their investing activity (since it is made for investment purpose).
Hope this clarifies your doubt!!