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- Cash equivalents refer to highly liquid investments that are readily convertible into cash and have a short maturity period. In the field of accounting, cash equivalents are classified as assets that are held by a company and can be used to meet short-term cash requirements.
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May 31, 2024 · Cash and cash equivalents help companies with their working capital needs since these liquid assets are used to pay off current liabilities, which are short-term debts and bills.
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.
Oct 4, 2024 · Companies use cash equivalents to generate a modest return without compromising liquidity, making them an effective tool for short-term financial strategy. For example, a corporation might hold commercial paper as a cash equivalent, enabling it to earn interest while retaining the ability to meet unexpected expenses.
Feb 27, 2023 · Cash and cash equivalents (CCE) are highly liquid assets, meaning they can be converted into cash within 90 days. Examples include cash, bank accounts, and short-term, liquid securities. How are cash and cash equivalents calculated?
To be considered a cash equivalent, it needs to be highly liquid, redeemable upon demand, or able to be quickly converted into cash. Investments in longer-term liquid securities, like stocks or bonds, are not considered cash equivalents, even though they may be easily convertible into cash.
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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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] .