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Current assets
- Cash and cash equivalents are listed under current assets at the top of the balance sheet. They are the most liquid assets a company possesses, meaning they are most easily usable to make purchases or pay down debts.
May 31, 2024 · Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company's assets that are cash or can be converted into cash immediately.
Jul 31, 2023 · Cash equivalents are highly liquid investment securities that can be converted to cash easily and are found on a company's balance sheet.
Cash and cash equivalents are recorded as current assets (CCE) are the most liquid current assets found on a business's balance sheet. Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount". [1]
Cash equivalents are short-term investment securities that can be quickly converted into cash, making them essential components of a company’s current assets. They are characterized by high liquidity and low risk, often featuring solid credit quality.
For example, if your company has money market funds (such as stock in another company) that are easily converted into cash, this would be considered a cash equivalent. For an asset to be considered a cash equivalent, it must meet two key criteria: Highly liquid. The asset must be able to be converted very easily into cash. Short maturity period.
Cash is often reported within the asset category called cash equivalents. Cash equivalents are short-term, highly liquid assets that can readily be converted into known amounts of cash and with little risk of price fluctuations.
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Source: Amazon Investor Relations. Cash and cash equivalents differ from other current assets, like marketable securities and accounts receivable, based on their nature. However, certain marketable securities may be classified as cash equivalents, depending on the accounting policy of a company.
