An Item or Transaction Will Qualify for Classification as a Cash

question 23

Multiple Choice

An item or transaction will qualify for classification as a cash equivalent:

• A) only if it has a maturity of less than three months.
• B) only if its term to maturity is no greater than twelve months.
• C) only if it has a fixed maturity date of greater than twelve months.
• D) only if its term to maturity is no greater than twenty-four months.

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Definitions:

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business over a specific period.

Net Income

The net income of a business following the subtraction of all costs and taxes from the total earnings.

Ending Inventory

Ending inventory is the total value of goods available for sale at the end of an accounting period, calculated using the beginning inventory, additions, and subtractions of goods sold.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life.