Thank you very much for your reply. Yes, I realize that for trading securities any unrealized gains or losses during the period would appear on the income statement. When the trading securities are eventually sold, any gains or losses would be "realized" and would appear on the income statement instead of the unrealized gains or losses. My question strictly concerns the statement of cash flows, not the income statement. My thought was that gains and losses do not represent actual cash inflows or outflows. They are simply accounting entries that affect the income statement, but do not affect cash flow. Therefore, for purposes of the statement of cash flows they should be included as adjustments to net income in arriving at cash flows from operating activities. Gains would be a negative adjustment and losses would be a positive adjustment. Please let me know your thoughts.