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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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What are cash equivalents?

To determine

Introduction: Cash equivalents are the securities that are used for short term investment and they are highly liquid in nature and have high credit quality.

Explanation
  1. Treasury Bills: It’s a short-term debt obligation usually issued by the US Treasury department. When these are issued to the companies, they usually used these funds in lending the money to the stakeholders. They are commonly referred to as “T-bills.”
  2. Short−term Government Bonds: They are provided by governments to fund government projects. These are issued using the country’s domestic currency. When investing in government bonds, investors take a look at interest rate risks, political risks, and inflation rates.
  3. Marketable Securities: These are defined as the assets that are financial in nature and which can be easily converted into cash and are liquid in nature. These are liquid as it can be matured within a year or less than a year and the rates at which they may be converted into cash have minimum effect on the prices...

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