Question

Bay Manufacturing Co. purchased a 3-month U.S. Treasury bill. In preparing Bay's statement of cash flows, this purchase would:A. have no effect.B. be treated as an outflow from financing activities.C. be treated as an outflow from investing activities.D. be treated as an outflow from operating activities.

Answer 1

Answer:

A. have no effect.

Explanation:

The US Treasury Bill was purchased at short-term

So it would not affect the company's cash balance.

The rule for short-term invstment is to have litle risk

and a mature of less than 90 days

the US TB fullfil both, it has no risk and matures within 90 days It is considered a cash equivalent.