An item or transaction will qualify for classification as a cash equivalent:
A) only if it has a maturity of less than three months.
B) only if its term to maturity is no greater than twelve months.
C) only if it has a fixed maturity date of greater than twelve months.
D) only if its term to maturity is no greater than twenty-four months.

Question

Quizplus · Accepted Answer

A cash equivalent is an investment that can easily be converted into cash within a short period of time with a known cash value. Hence, an item or transaction will qualify for classification as a cash equivalent only if it has a maturity of less than three months.

An Item or Transaction Will Qualify for Classification as a Cash