Which of the following is considered to be a cash equivalent?
A)Accounts receivable
B)Notes receivable
C)Investments in short-term U.S. Government securities
D)Trading securities

Question

Quizplus · Accepted Answer

Cash equivalents are highly liquid investments that can be readily converted to cash with minimal risk of loss. Investments in short-term U.S. Government securities like Treasury bills, commercial paper, and money market funds are considered to be cash equivalents because they have a maturity of three months or less and are highly marketable. Accounts receivable and notes receivable are not cash equivalents because they represent amounts owed to a company by its customers, and trading securities refer to investments in stocks or bonds with the intention of selling them for a profit, which involves higher risk and volatility.

Which of the Following Is Considered to Be a Cash