Classification of Cash Equivalents and Investments on a Balance Sheet Classify each of the…
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Classification of Cash Equivalents and Investments on a Balance Sheet
Classify each of the following items as a cash equivalent (CE), a short-term investment (STI), or
a long-term investment (LTI).
1. A 120-day certificate of deposit.
2. Three hundred shares of GM common stock. The company plans on selling the stock in six
months.
3. A six-month U.S Treasury bill.
4. A 60-day certificate of deposit.
5. Ford Motor Co. bonds maturing in 15 years. The company intends to hold the bonds until
maturity.
6. Commercial paper issued by ABC Corp., maturing in four months.
7. Five hundred shares of Chrysler common stock. The company plans to sell the stock in
60 days to help pay for a note due at that time at the bank.
8. Two hundred shares of GE preferred stock. The company intends to hold the stock for ten
years and then sell it to help finance construction of a new factory.
9. Ten-year U.S. Treasury bonds. The company plans to sell the bonds on the open
market in six months.
10. A 90-day U.S. Treasury bill.
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