Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. They are typically included with cash in financial statements.

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Cash Equivalents

Question 5

Multiple Choice

Cash equivalents:

A) Include amounts of cash available through an unused line of credit.
B) Are investments in the publicly traded stocks and bonds of large corporations.
C) Are usually included in the term "cash" in the balance sheet and the statement of cash flows.
D) Is another term for financial assets.

Correct Answer: