For an Investment to Qualify as a Cash Equivalent, It

question 120

Multiple Choice

For an investment to qualify as a cash equivalent, it must be readily convertible to a known amount of cash and which of the following is correct?

• A) It must be identified as a cash equivalent on the statement of earnings.
• B) It must mature within 4 months.
• C) The investment must have a known foreign exchange rate.
• D) Must be sufficiently close to its maturity date so that its market value is relatively insensitive to interest rate changes.

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Definitions:

Bank Credit Card

A payment card issued by a bank allowing cardholders to purchase goods and services on credit.

Income Statement Relationships

The relationships within an income statement involve how revenues, expenses, and profits interact and affect each other to show a company's financial performance over a period.

Uncollectible Accounts

Accounts receivable that are considered unlikely to be collected and thus are written off as a bad debt expense.

Promissory Note

A tool used in finance that carries an explicit pledge by a party to give another party a defined sum of cash, which may be required instantly or at a later date agreed upon by both parties.