Multiple Choice
Which of the following would be considered a source document in an accounting system?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is NOT a money market instrument?
A
Certificate of Deposit
B
Commercial Paper
C
Corporate Bond
D
Treasury Bill
Verified step by step guidance1
Understand the concept of money market instruments: Money market instruments are short-term financial instruments that are typically used for borrowing and lending in the short term, usually less than one year. Examples include Treasury Bills, Certificates of Deposit, and Commercial Paper.
Analyze each option provided: Treasury Bills, Certificates of Deposit, and Commercial Paper are all examples of money market instruments because they are short-term and highly liquid.
Consider the characteristics of Corporate Bonds: Corporate Bonds are long-term debt instruments issued by corporations to raise capital. They typically have maturities longer than one year, which makes them unsuitable for classification as money market instruments.
Compare Corporate Bonds to the other options: Since Corporate Bonds are long-term instruments, they do not meet the criteria for money market instruments, which are short-term in nature.
Conclude that Corporate Bonds are NOT a money market instrument based on their long-term maturity and purpose, distinguishing them from the other options provided.
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