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 2 - Part 1 - Page 380: a

Answer

Cash equivalents constitute short-lived investments whose liquidity is very heightened. Due to their equivalence to cash, they can be changed into cash without difficulty. The cash equivalents' maturity is relatively shorter. The simplicity of transfiguring them to real cash is what distinguishes cash equivalents from other short-term investments.

Work Step by Step

Cash equivalents constitute short-lived investments whose liquidity is very heightened. Due to their equivalence to cash, they can be changed into cash without difficulty. The cash equivalents' maturity is relatively shorter. The simplicity of transfiguring them to real cash is what distinguishes cash equivalents from other short-term investments.
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