The company has $10,000 in its checking account,$20,000 in its savings account,$1,000 in petty cash,$25,000 in one-year Treasury bills,and $15,000 in a money market fund.What amount should be reported as cash and cash equivalents on the balance sheet?
A) $30,000
B) $31,000
C) $46,000
D) $71,000

Question

Quizplus · Accepted Answer

Cash and cash equivalents include cash and short-term investments that can be easily converted into cash. Checking account, savings account, and petty cash all qualify as cash. Treasury bills and money market funds are considered short-term investments that can be easily converted into cash. Therefore, the total amount of cash and cash equivalents is $46,000 ($10,000+$20,000+$1,000+$25,000+$15,000).

The Company Has $10,000 in Its Checking Account,$20,000 in Its