Explain the cash equivalents. Also, explain the manner in which the cash equivalents are treated while preparing the statement of cash flows.

Question

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Answer 1

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 14, Problem 1DQ

To determine

Explain the cash equivalents. Also, explain the manner in which the cash equivalents are treated while preparing the statement of cash flows.

Expert Solution & Answer

Explanation of Solution

Cash Equivalents:

Cash equivalents are treated as cash in a company. The investments which are highly liquid in nature are termed as cash equivalents. These include treasury bills, commercial papers.

The cash equivalents can be easily converted in cash. Hence, firms invest their surplus cash in these short-term securities. The money market funds and commercial deposits are such highly liquid investments which are considered as cash equivalents.

Due to the highly liquid nature, the cash equivalents are considered as cash in preparing the statement of cash flows.

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Answer 2

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 14, Problem 1DQ

To determine

Explain the cash equivalents. Also, explain the manner in which the cash equivalents are treated while preparing the statement of cash flows.

Expert Solution & Answer

Explanation of Solution

Cash Equivalents:

Cash equivalents are treated as cash in a company. The investments which are highly liquid in nature are termed as cash equivalents. These include treasury bills, commercial papers.

The cash equivalents can be easily converted in cash. Hence, firms invest their surplus cash in these short-term securities. The money market funds and commercial deposits are such highly liquid investments which are considered as cash equivalents.

Due to the highly liquid nature, the cash equivalents are considered as cash in preparing the statement of cash flows.

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Answer 3

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 14, Problem 1DQ

To determine

Explain the cash equivalents. Also, explain the manner in which the cash equivalents are treated while preparing the statement of cash flows.

Expert Solution & Answer

Explanation of Solution

Cash Equivalents:

Cash equivalents are treated as cash in a company. The investments which are highly liquid in nature are termed as cash equivalents. These include treasury bills, commercial papers.

The cash equivalents can be easily converted in cash. Hence, firms invest their surplus cash in these short-term securities. The money market funds and commercial deposits are such highly liquid investments which are considered as cash equivalents.

Due to the highly liquid nature, the cash equivalents are considered as cash in preparing the statement of cash flows.

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Answer 4

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 14, Problem 1DQ

To determine

Explain the cash equivalents. Also, explain the manner in which the cash equivalents are treated while preparing the statement of cash flows.

Expert Solution & Answer

Explanation of Solution

Cash Equivalents:

Cash equivalents are treated as cash in a company. The investments which are highly liquid in nature are termed as cash equivalents. These include treasury bills, commercial papers.

The cash equivalents can be easily converted in cash. Hence, firms invest their surplus cash in these short-term securities. The money market funds and commercial deposits are such highly liquid investments which are considered as cash equivalents.

Due to the highly liquid nature, the cash equivalents are considered as cash in preparing the statement of cash flows.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 14, Problem 1DQ

To determine

Explain the cash equivalents. Also, explain the manner in which the cash equivalents are treated while preparing the statement of cash flows.

Expert Solution & Answer

Explanation of Solution

Cash Equivalents:

Cash equivalents are treated as cash in a company. The investments which are highly liquid in nature are termed as cash equivalents. These include treasury bills, commercial papers.

The cash equivalents can be easily converted in cash. Hence, firms invest their surplus cash in these short-term securities. The money market funds and commercial deposits are such highly liquid investments which are considered as cash equivalents.

Due to the highly liquid nature, the cash equivalents are considered as cash in preparing the statement of cash flows.

Answer 6

Chapter 14, Problem 1DQ

To determine

Explain the cash equivalents. Also, explain the manner in which the cash equivalents are treated while preparing the statement of cash flows.

Expert Solution & Answer

Explanation of Solution

Cash Equivalents:

Cash equivalents are treated as cash in a company. The investments which are highly liquid in nature are termed as cash equivalents. These include treasury bills, commercial papers.

The cash equivalents can be easily converted in cash. Hence, firms invest their surplus cash in these short-term securities. The money market funds and commercial deposits are such highly liquid investments which are considered as cash equivalents.

Due to the highly liquid nature, the cash equivalents are considered as cash in preparing the statement of cash flows.

Answer 7

Chapter 14, Problem 1DQ

To determine

Explain the cash equivalents. Also, explain the manner in which the cash equivalents are treated while preparing the statement of cash flows.

Answer 8

Expert Solution & Answer

Explanation of Solution

Cash Equivalents:

Cash equivalents are treated as cash in a company. The investments which are highly liquid in nature are termed as cash equivalents. These include treasury bills, commercial papers.

The cash equivalents can be easily converted in cash. Hence, firms invest their surplus cash in these short-term securities. The money market funds and commercial deposits are such highly liquid investments which are considered as cash equivalents.

Due to the highly liquid nature, the cash equivalents are considered as cash in preparing the statement of cash flows.