Cash equivalents are securities that

Question

Quizplus · Accepted Answer

Cash equivalents are defined as highly liquid investments that are easily convertible into known amounts of cash and have maturity dates of three months or less from the date of purchase. Choice A is incorrect because the time period is limited to one year, while cash equivalents have a much shorter maturity date. Choice B is incorrect because the maturity date for cash equivalents is shorter than six months. Choice C is incorrect because the conversion into cash is not based on the normal operating cycle, but on the shorter time frame of three months or less.

Cash Equivalents Are Securities That