Which of the following items is considered to be a cash equivalent?
A) An investment in a U. S. bond due in two years
B) A one-year certificate of deposit due in six weeks
C) A one-month Treasury bill due in two weeks
D) A promissory note due from a customer in 7 months

Question

Quizplus · Accepted Answer

Cash equivalents are highly liquid investments that can easily be converted to cash within 90 days or less. Treasury bills are considered one of the most common examples of cash equivalents. A one-month treasury bill that is due in two weeks is highly liquid and can be easily converted to cash, making it a cash equivalent. The other options listed are not considered cash equivalents because they have longer maturities or are not as easily converted to cash.

Which of the Following Items Is Considered to Be a Cash