A is corrent. On the statement of cash flows, investing activities include the acquisition and disposition of long-term productive assets or securities that are not considered cash equivalents, and the lending of money and collection of loans. The purchase of a 3-month US Treasury bill is the acquisition of a security; however, it is considered a cash equivalent and thus would not be included in investing activities. Furthermore, the exchange of cash for cash equivalents would result in no net change in cash and cash equivalents. Therefore, the purchase of the 3-month Treasury bill would have no effect on the statement of cash flows.
B is incorrect because the Treasury bill is considered a cash equivalent. Therefore, its purchase will not be treated as an investing activity.
C is incorrect. Financing activities include obtaining resources from owners and creditors and returning the investment and repaying the amount borrowed. The purchase of the 3-month Treasury bill therefore is not a financing activity.
D is incorrect because there is no "lending activities" section in the statement of cash flows; lending activities are included under investing activities.
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