To qualify as a cash equivalent, an investment must be:
A) Easily convertible into a known cash amount
B) Three months or more from maturity
C) Over $500,000 in amount
D) All of the above

Question

Quizplus · Accepted Answer

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Options B and C are not criteria for an investment to qualify as a cash equivalent.

To Qualify as a Cash Equivalent, an Investment Must Be