Which of the following items is not a cash equivalent?
A)Commercial paper
B)A three-year Treasury note purchased two months before its maturity
C)Money market funds
D)A corporate bond investment that has five years until maturity when it is purchased

Question

Quizplus · Accepted Answer

A cash equivalent is a highly liquid investment that can be easily converted to cash without significant loss of value and with maturities of three months or less. Since a corporate bond investment that has five years until maturity when it is purchased does not meet the criteria of a cash equivalent, D is the correct answer. Commercial paper, money market funds, and a three-year Treasury note purchased two months before its maturity are all examples of cash equivalents.

Which of the Following Items Is Not a Cash Equivalent