Cash equivalents are short-term highly liquid investment assets that are readily converted to a known cash amount,and are close enough to their due date so that their market value will not greatly change.

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Cash equivalents are defined as assets that are highly liquid and have a short-term maturity date, typically less than three months. They are readily convertible to cash and their market value is unlikely to fluctuate significantly within their short-term maturity date. Examples of cash equivalents include treasury bills, money market funds, and commercial paper.

Cash Equivalents Are Short-Term Highly Liquid Investment Assets That Are