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Basic Question 1 of 24

For purposes of preparing a cash flow statement, which of the following is not considered a "cash equivalent"?

A. A money market fund
B. An investment in IBM bonds
C. Treasury bills
D. Commercial paper
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User Contributed Comments 9

User Comment
jsheth Because Bonds have a fixed maturity? No. It's due to liquidity.
magicchip + fluctuating value.
jessiew123 Can someone tell me what "commercial paper" is?
skath Commericial Paper is when company borrows short term loans to cover its operating expenses eg. payroll.
bahamas commercial paper credit freeze was what caused lehman and countless other large banks to go under.
YOUCANDOIT good point jsheth!
leon121 Isn't commercial paper a liability?
joy2015 it can be an asset if you have it.
choas69 i still dont get it.
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I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes

Barnes

Learning Outcome Statements

compare and contrast the direct and indirect methods of presenting cash from operating activities and describe arguments in favor of each method;

describe how the cash flow statement is linked to the income statement and the balance sheet;

describe the steps in the preparation of direct and indirect cash flow statements, including how cash flows can be computed using income statement and balance sheet data;

demonstrate the conversion of cash flows from the indirect to direct method;

CFA® 2024 Level I Curriculum, Volume 3, Module 20.