Which of the Following Items Is Considered to Be a Cash

question 108

Multiple Choice

Which of the following items is considered to be a cash equivalent?

• A)An investment in a U.S.bond due in two years.
• B)A one-year certificate of deposit due in six months.
• C)A one-month Treasury bill due in two weeks.
• D)A promissory note due from a customer in 7 months.

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Definitions:

Fixed Expenses

are costs that do not change with the volume of production or sales, such as rent and salaries.

Sales

The transactions between a company and its customers where goods or services are provided in exchange for money.

Margin of Safety

The difference between actual sales and breakeven sales, indicating how much sales can decrease before a business incurs a loss.

Variable Expenses

Expenditures that fluctuate in tandem with operational activity levels, including costs like utilities and commissions.