The meaning of cash equivalents.

Question

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Answer 1

Question

Chapter 9, Problem 9.1Q

To determine

The meaning of cash equivalents.

Expert Solution & Answer

Answer to Problem 9.1Q

Cash equivalents are the negotiable instruments that can be converted into cash within an operating cycle of the company.

Explanation of Solution

Cash:

Cash is monetary value readily available for spending for the purpose of exchange of goods and services. Cash can be in the form of currency notes, amount deposited in the bank account, bank cheques.

Cash Equivalents:

Cash equivalent are the negotiable instruments that can be converted into cash within a short period of time
Examples of cash equivalents are bills receivable, commercial paper, certificate of deposits.
Generally cash equivalents are investments made for the purpose of earning interest out of the unused cash.
Use of cash equivalents indicates that a company is financially sound.

Conclusion

Cash equivalents are the negotiable instruments that are substitutes for cash.

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Grunewald Industries sells on terms of 3/10, net 40. Gross sales last year were $4,161,000 and accounts receivable averaged $370,500. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate daily sales based on a 365-day year, calculate the average receivables for discount customers, and then find the DSO for the nondiscount customers.) Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit: %

Answer 2

Question

Chapter 9, Problem 9.1Q

To determine

The meaning of cash equivalents.

Expert Solution & Answer

Answer to Problem 9.1Q

Cash equivalents are the negotiable instruments that can be converted into cash within an operating cycle of the company.

Explanation of Solution

Cash:

Cash is monetary value readily available for spending for the purpose of exchange of goods and services. Cash can be in the form of currency notes, amount deposited in the bank account, bank cheques.

Cash Equivalents:

Cash equivalent are the negotiable instruments that can be converted into cash within a short period of time
Examples of cash equivalents are bills receivable, commercial paper, certificate of deposits.
Generally cash equivalents are investments made for the purpose of earning interest out of the unused cash.
Use of cash equivalents indicates that a company is financially sound.

Conclusion

Cash equivalents are the negotiable instruments that are substitutes for cash.

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Answer 3

Question

Chapter 9, Problem 9.1Q

To determine

The meaning of cash equivalents.

Expert Solution & Answer

Answer to Problem 9.1Q

Cash equivalents are the negotiable instruments that can be converted into cash within an operating cycle of the company.

Explanation of Solution

Cash:

Cash is monetary value readily available for spending for the purpose of exchange of goods and services. Cash can be in the form of currency notes, amount deposited in the bank account, bank cheques.

Cash Equivalents:

Cash equivalent are the negotiable instruments that can be converted into cash within a short period of time
Examples of cash equivalents are bills receivable, commercial paper, certificate of deposits.
Generally cash equivalents are investments made for the purpose of earning interest out of the unused cash.
Use of cash equivalents indicates that a company is financially sound.

Conclusion

Cash equivalents are the negotiable instruments that are substitutes for cash.

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

Answer 4

Question

Chapter 9, Problem 9.1Q

To determine

The meaning of cash equivalents.

Expert Solution & Answer

Answer to Problem 9.1Q

Cash equivalents are the negotiable instruments that can be converted into cash within an operating cycle of the company.

Explanation of Solution

Cash:

Cash is monetary value readily available for spending for the purpose of exchange of goods and services. Cash can be in the form of currency notes, amount deposited in the bank account, bank cheques.

Cash Equivalents:

Cash equivalent are the negotiable instruments that can be converted into cash within a short period of time
Examples of cash equivalents are bills receivable, commercial paper, certificate of deposits.
Generally cash equivalents are investments made for the purpose of earning interest out of the unused cash.
Use of cash equivalents indicates that a company is financially sound.

Conclusion

Cash equivalents are the negotiable instruments that are substitutes for cash.

Want to see more full solutions like this?

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

Answer 5

Chapter 9, Problem 9.1Q

To determine

The meaning of cash equivalents.

Expert Solution & Answer

Answer to Problem 9.1Q

Cash equivalents are the negotiable instruments that can be converted into cash within an operating cycle of the company.

Explanation of Solution

Cash:

Cash is monetary value readily available for spending for the purpose of exchange of goods and services. Cash can be in the form of currency notes, amount deposited in the bank account, bank cheques.

Cash Equivalents:

Cash equivalent are the negotiable instruments that can be converted into cash within a short period of time
Examples of cash equivalents are bills receivable, commercial paper, certificate of deposits.
Generally cash equivalents are investments made for the purpose of earning interest out of the unused cash.
Use of cash equivalents indicates that a company is financially sound.

Conclusion

Cash equivalents are the negotiable instruments that are substitutes for cash.

Answer 6

Chapter 9, Problem 9.1Q

To determine

The meaning of cash equivalents.

Expert Solution & Answer

Answer to Problem 9.1Q

Cash equivalents are the negotiable instruments that can be converted into cash within an operating cycle of the company.

Explanation of Solution

Cash:

Cash is monetary value readily available for spending for the purpose of exchange of goods and services. Cash can be in the form of currency notes, amount deposited in the bank account, bank cheques.

Cash Equivalents:

Cash equivalent are the negotiable instruments that can be converted into cash within a short period of time
Examples of cash equivalents are bills receivable, commercial paper, certificate of deposits.
Generally cash equivalents are investments made for the purpose of earning interest out of the unused cash.
Use of cash equivalents indicates that a company is financially sound.

Conclusion

Cash equivalents are the negotiable instruments that are substitutes for cash.

Answer 7

Chapter 9, Problem 9.1Q

To determine

The meaning of cash equivalents.

Answer 8

Expert Solution & Answer

Answer to Problem 9.1Q

Cash equivalents are the negotiable instruments that can be converted into cash within an operating cycle of the company.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Cash:

Cash is monetary value readily available for spending for the purpose of exchange of goods and services. Cash can be in the form of currency notes, amount deposited in the bank account, bank cheques.

Cash Equivalents:

Cash equivalent are the negotiable instruments that can be converted into cash within a short period of time
Examples of cash equivalents are bills receivable, commercial paper, certificate of deposits.
Generally cash equivalents are investments made for the purpose of earning interest out of the unused cash.
Use of cash equivalents indicates that a company is financially sound.