Cash equivalents
A) are illegal in some states
B) will be converted to cash within two years
C) will be converted to cash within three months
D) will be converted to cash within four months

Question

Quizplus · Accepted Answer

Cash equivalents are highly liquid investments that can be quickly converted to cash within three months or less. Examples include short-term government bonds and money market funds. Choices A and D are incorrect as there are no legal restrictions on cash equivalents and they do not necessarily need to be converted to cash within a specific four-month timeframe. Choice B is incorrect as the timeframe for conversion to cash is within three months, not two years.

Cash Equivalents