Cash and cash equivalents include:

Question

Quizplus · Accepted Answer

Statement I: Cash and cash equivalents refer to assets that can be readily converted into cash within a short period of time, typically less than three months. Examples of cash and cash equivalents include cash on hand, bank deposits, and short-term investments such as treasury bills and commercial paper.

This statement is correct as cash and cash equivalents are defined as short-term, highly liquid investments that can be readily converted into cash.

Statement II: Cash and cash equivalents are reported on the balance sheet as a current asset.

This statement is also correct. Cash and cash equivalents are classified as a current asset because they are expected to be used or converted into cash within a year or less. They are reported on the balance sheet as a separate line item under current assets.

Cash and Cash Equivalents Include