Each of the following items is considered a cash equivalent except
A)a 30-day certificate of deposit.
B)60-day corporate commercial paper.
C)a 75-day U.S. Treasury bill.
D)a 180-day note issued by a local government.

Question

Quizplus · Accepted Answer

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Typically, only investments with original maturities of three months or less qualify. A 180-day note exceeds this duration and is therefore not considered a cash equivalent.

Each of the Following Items Is Considered a Cash Equivalent