Amounts held in cash equivalent investments must be reported separately from amounts held as cash in the statement of cash flows.

Question

Quizplus · Accepted Answer

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and so close to their maturity that they present insignificant risk of changes in value because of changes in interest rates. Therefore, in the statement of cash flows, amounts held in cash equivalents are combined with cash, not reported separately.

Amounts Held in Cash Equivalent Investments Must Be Reported Separately