The time to maturity is relevant in the classification of cash equivalents.

Question

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The time to maturity is a key factor in determining whether an investment can be classified as a cash equivalent. Cash equivalents are short-term and highly liquid investments that can be easily converted to cash, typically within 90 days or less from the date of purchase. Therefore, if an investment has a maturity date beyond 90 days, it would not be classified as a cash equivalent.

The Time to Maturity Is Relevant in the Classification of Cash