An investment that must be readily convertible to known amounts of cash,that is subject to insignificant risk of changes in value,and normally qualifies only when it has a short maturity of three months or less from the date of acquisition is called a(n)
A)Trading security
B)Cash equivalent
C)Treasury bill,commercial paper,or equity security
D)Operating activity
E)Financing activity

Question

Quizplus · Accepted Answer

A cash equivalent is an investment that is easily convertible into cash and has minimal risk of value fluctuations. This type of investment usually has a short maturity period of three months or less. Examples of cash equivalents include treasury bills, commercial paper, and money market funds. Therefore, the answer is B - cash equivalent.

An Investment That Must Be Readily Convertible to Known Amounts