A company holds $100 000 in a term deposit account as an interest-generating investment.For purposes of the statement of cash flows,the term deposit will be classified as:
A) a cash equivalent.
B) an investment.
C) either a cash equivalent or an investment.
D) none of the above.

Question

Quizplus · Accepted Answer

The term deposit account is an investment, as it generates interest for the company. It is not considered a cash equivalent because it is not readily convertible into cash without a significant risk of changes in value. Therefore, the term deposit account should be classified under the "investing activities" section of the statement of cash flows.

A Company Holds $100 000 in a Term Deposit Account