Quick Cheeck 3-14 Why is liquidity important to a firm Answer: A firm that is profitable in the long run can experience serious difficulties and even fail if it runs out of cash or credit in the short run. Questions and Problems Review of Financial Statements 1. Suggest if and how the following assets and liabilities would be recorded on their owner's balance sheets. a. a lottery ticket b. a successful song c. an unsuccessful movie 2. Show how the following events and transactions should appear on your personal income statement, balance sheet, and cash flow statement. a. On July 1, 200X, you receive $20,000 in gifts upon graduation from school and pay off a $10,000 student loan. Quick Cheeck 3-14 Why is liquidity important to a firm Answer: A firm that is profitable in the long run can experience serious difficulties and even fail if it runs out of cash or credit in the short run. Questions and Problems Review of Financial Statements 1. Suggest if and how the following assets and liabilities would be recorded on their owner's balance sheets. a. a lottery ticket b. a successful song c. an unsuccessful movie 2. Show how the following events and transactions should appear on your personal income statement, balance sheet, and cash flow statement. a. On July 1, 200X, you receive $20,000 in gifts upon graduation from school and pay off a $10,000 student loan