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

December 31, 2010 December 31, 2009 Accounts Receivable $12,300 $10,000 Certifi cates of Deposit (three months) 10,000 10,000 Marketable Securities 4,500 4,000 Petty Cash Fund 1,200 1,500 Money Market Fund 25,800 28,000 Cash in Checking Account 6,000 6,000 Required 1. Which items are cash equivalents?

2. Explain where items that are not cash equivalents should be classifi ed on the balance sheet.

3. What are the amount and the direction of change in cash and cash equivalents for 2010? Is the company as liquid at the end of 2010 as it was at the end of 2009?

Explain your answer.

AppendixLO1