An investment that must be readily convertible to known amounts of cash, that issubject to insignificant risk of changes in value, and normally qualifies only when it has a short maturity of three months or less from the date of acquisition is called an):
A) Financing activity.
B) Cash equivalent.
C) Operating activity.
D) Trading security.
E) Treasury bill, commercial paper, or equity security.

Question

Quizplus · Accepted Answer

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value, typically with a maturity of three months or less.

An Investment That Must Be Readily Convertible to Known Amounts