Cash and Liquid Assets on the Balance Sheet The following accounts are listed in a company’s general ledger:

Required 1. Which items are cash equivalents?
2. Explain where items that are not cash equivalents should be classified on the balance sheet.
3. What are the amount and the direction of change in cash and cash equivalents for 2008? Is the company as liquid at the end of 2008 as it was at the end of 2007? Explain your answer.

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Accounts receivable Certificates of deposit (three months) Marketable securities Petty cash fund Money market fund Cash in checking account December 31, 2008 December 31, 2007 $12,300 $10,000 10,000 10,000 4,500 4,000 1,200 1,500 25,800 28,000 6,000 6,000