Question

Cash equivalents refers to :
(A) Demand deposits with Bank
(B) Bills receivables
(C) Treasury bill
(D) Commercial Paper
(E) Marketable Securities
Choose the correct answer from the options given below :

• A. (A), (C), (D) and (E) only
• B. (A), (B), (C) and (D) only
• C. (A), (B), (D) and (E) only
• D. (B), (C), (D) and (E) only

Hint:

"Make sure that, when you think of cash equivalents, only those item can be considered which has low risk, and great liquidity".

Answer 1

The Correct Option is A

Understanding Key terms involved for identification of "Cash Equivalent":
Cash Equivalents has to be easily convertible into cash and has very little risk in terms of return
A Demand deposits with Bank - YES its Cash Equivalent
B Bills receivables - NO its a promise to be paid later
C Treasury bill - YES its Cash Equivalent and have sovereign guarentee
D Commercial Paper - YES its Cash Equivalent
E Marketable Securities YES its Cash Equivalent