Short-term investments in marketable equity securities are considered the equivalent of cash (i.e., they are combined with cash) in preparing the statement of cash ﬂows.

Question

Quizplus · Accepted Answer

Short-term investments in marketable equity securities are not considered the equivalent of cash in preparing the statement of cash flows; they are classified separately under short-term investments or marketable securities. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and so close to their maturity that they present insignificant risk of changes in value because of changes in interest rates, typically with original maturities of three months or less.

Short-Term Investments in Marketable Equity Securities Are Considered the Equivalent