Which of the following is considered to be a cash equivalent?
A) Investments in short-term U.S. Government securities
B) Accounts receivable
C) Notes receivable
D) Trading securities

Question

Quizplus · Accepted Answer

Cash equivalents are highly liquid investments that can be readily converted into cash within three months or less. Short-term U.S. Government securities are considered cash equivalents because they are highly liquid and almost risk-free. Accounts receivable and notes receivable are not considered cash equivalents because they require time and effort to convert into cash. Trading securities are not considered cash equivalents because they are investments held for trading purposes and not for immediate conversion into cash.

Which of the Following Is Considered to Be a Cash