Question

Which of the following is not included in Cash and Cash Equivalents?

Options

• Balance with bank.

• Debentures purchased maturing after 100 days of purchase.

• Cheques and drafts on hand.

• Cash on hand.

Answer 1

Debentures purchased maturing after 100 days of purchase.

Explanation:

An investment qualifies as a cash equivalent only if it has a short maturity period of three months (90 days) or less from its purchase date. Because these debentures mature after 100 days, they exceed this strict 90-day time limit and must be classified as regular short-term investments instead. On the other hand, cash on hand, bank balances, and cheques or drafts are either ready cash or can be converted instantly, meaning they naturally count as Cash and Cash Equivalents.