An Investment That Is Readily Convertible to a Known Amount

question 151

Multiple Choice

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n) :

• A) Operating activity.
• B) Cash equivalent.
• C) Short-term marketable equity security.
• D) Common stock.
• E) Financing activity.

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Definitions:

Outstanding Checks

Outstanding checks are checks that have been written and recorded in the payor's ledger but have not yet been cashed or cleared by the bank.

Deposits In Transit

Bank deposits that have been made but not yet credited to the business's bank account, typically appearing on a bank reconciliation statement.

Service Charges

Fees imposed by a company for the provision of a service, often applied in banking, brokerage, and hospitality industries.

NSF Check

A check that cannot be processed due to insufficient funds in the account it is drawn against, known as a "Non-Sufficient Funds" check.