Cash equivalents are securities that a. have maturity dates of at least 6 months. b. have maturity dates of 3 months or less. c. management intends to convert into cash within 1 year. d. management intends to convert into cash within the normal operating cycle.
Added by Purificaci-N E.
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They are typically very close to maturity. Show more…
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Cash equivalents would include: a. prepaid expenses that were purchased with cash b. highly liquid investments that can be quickly converted to cash c. cash restricted for special purposes such as to repay debt in the future d. accounts receivable from customers
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Statement I: In accordance with PAS 1 par. 66D, an entity shall classify an asset as current when the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. Statement II: Cash equivalents are investments with original maturities of six months or less. a. Only statement I is correct. b. Only statement II is correct c. Both statements are correct d. Both statements are incorrect
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