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Give the Meaning of ‘Cash Equivalents’ for the Purpose of Preparing Cash Flow Statement. - Accountancy

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Give the meaning of ‘Cash Equivalents’ for the purpose of preparing Cash Flow Statement.

What is meant by ‘Cash Equivalent’ while preparing Cash Flow Statement?

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Solution

Cash Equivalents are short-term highly liquid investments that can be readily convertible into cash and are subject to an insignificant risk of change in value. They are held for the purpose of meeting shortterm cash commitments. A few of the examples of cash equivalents are treasury bills, commercial bills, call money etc.

Concept: Concept of Cash Flow Statement
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