The following accounts are listed in a company's general ledger:

                                                            December 31, 2012            December 31, 2011

Accounts Receivable.....................................$12,300..........................$10,000

Certificates of Deposit (three months).........10,000...........................10,000

Marketable Securities.......................................4,500.............................4,000

Petty Cash Fund.................................................1,200.............................1,500

Money Market Fund........................................25,800...........................28,000

Cash in Checking Account.................................6,000.............................6,000

Required

1. Which items are cash equivalents?

2. Explain where items that are not cash equivalents should be classified on the balance sheet.

3. What are the amount and the direction of change in cash and cash equivalents for 2012? Is the company as liquid at the end of 2012 as it was at the end of 2011? Explain your answer.