1-10

Question 1

Cash Equivalents

Answer 1

Short-term securities that will mature in less than 3 months at the date of purchase

Question 2

Short-Term Marketable Securities

Answer 2

Short-term securities that will mature in GREATER than 3 months at the date of purchase

Question 3

Treasury Securities

Answer 3

Bills, Bonds, and Notes issued by the federal government

Question 4

Commercial Paper

Answer 4

Short-Term Debt for Corporations

Question 5

Bank Certificate of Deposit

Answer 5

Promissory note issued by a bank

Question 6

Money Market Mutual Funds

Answer 6

Mutual funds invested into treasury securities, commercial paper, and bank certificates of deposits

(T.C.B.)

Question 7

Interest Receivable

Answer 7

Interest a company has earned but has yet to receive

Question 8

Interest Receivable Account

Answer 8

Records the amount of interest a company expects to collect in the future from a note

Question 9

Interest Income Account

Answer 9

Interest the company expects to collect

Question 10

What changes on the balance sheet due to accrued interest?

Answer 10

Assets increase due to an increase in interest receivable

Equity increases due to an increase in interest income