Cash Equivalents A friend in your class is confused and asks for your help in understanding cash

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Cash Equivalents A friend in your class is confused and asks for your help in understanding cash equivalents:

“Say a company invests $50,000 in a 60-day certifi cate of deposit. Since the company obviously used cash to buy the CD, why is this not classifi ed as an investing activity on the statement of cash fl ows?” How would you respond to your friend’s question?

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