Which of the following items would be considered a cash equivalent if it was held at the balance sheet date?
A)U.S.Treasury bill purchased when there were 90 days until maturity
B)Commercial paper with a six-month maturity that was purchased at the issue date
C)The common stock of a company traded on the New York Stock Exchange that was purchased 30 days before the balance sheet date
D)U.S.Treasury note that matures two years after it is issued and that was purchased four months before the balance sheet date

Question

Quizplus · Accepted Answer

A U.S. Treasury bill with 90 days until maturity would be considered a cash equivalent because it can be easily sold for cash before it matures.

B, C, and D are not considered cash equivalents because they are held for longer periods of time or are not easily convertible into cash without significant value changes or costs.

Which of the Following Items Would Be Considered a Cash