Question

An investment normally qualifies as cash-equivalent only when, from the date of acquisition, it has a short maturity period of ______.

Options

• One month or less

• Three months or less

• Three months or more

• One year or less

Answer 1

An investment normally qualifies as cash-equivalent only when, from the date of acquisition, it has a short maturity period of three months or less.

Explanation:

Cash equivalents are short-term investments that are readily convertible into known amounts of cash. They must mature within three months of the date of acquisition to qualify as cash equivalents.