Cash equivalents:
A) Include savings accounts.
B) Include checking accounts.
C) Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes.
D) Include time deposits.
E) Have no immediate value.

Question

Quizplus · Accepted Answer

Cash equivalents are defined as short-term investments that can be easily converted to cash and are sufficiently close to their maturity date that their value is not sensitive to interest rate changes. Examples include treasury bills, commercial paper, and money market funds. Savings accounts, checking accounts, and time deposits may be considered liquid assets, but they are not considered cash equivalents. Cash equivalents must have an immediate and certain value.

Cash Equivalents