Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 7 - Cash and Receivables - Review and Practice - Using Your Judgment - Financial Statement Analysis Case: Case 1 - Page 380: d

Answer

Cash equivalents are close to maturity; consequently, should interest rates change, there would be no significant risks. Besides, cash equivalents can be changed into amounts of money that are known. Temporary investments such as short-term papers and money market funds offer interest to investors. The conversion of short-term investments to money is restricted and could attract penalties depending on the underlying agreements.

Work Step by Step

Cash equivalents are close to maturity; consequently, should interest rates change, there would be no significant risks. Besides, cash equivalents can be changed into amounts of money that are known. Temporary investments such as short-term papers and money market funds offer interest to investors. The conversion of short-term investments to money is restricted and could attract penalties depending on the underlying agreements.
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.

GradeSaver will pay $15 for your literature essays
GradeSaver will pay $25 for your college application essays
GradeSaver will pay $50 for your graduate school essays – Law, Business, or Medical
GradeSaver will pay $10 for your Community Note contributions
GradeSaver will pay $500 for your Textbook Answer contributions