Question

Short-term highly liquid investments qualify as cash equivalents if they are realisable into known amounts of cash from the date of acquisition within a period of ______.

Options

• 6 months or less

• 9 months or less

• 12 months or less

• 3 months or less

Answer 1

Short-term highly liquid investments qualify as cash equivalents if they are realisable into known amounts of cash from the date of acquisition within a period of 3 months or less.

Explanation:

An asset that is expected to be converted into cash within three months without any significant risk of change in value is called a cash equivalent.