F3-M1-Cash and Cash Equivalents

Question 1

Define cash and cash equivalents

Answer 1

1. Cash includes both currency and demand deposits with banks and/or other financial institutions
2. Cash equivalents include short-term, highly liquid investments that are both readily convertible to cash and so near their maturity when acquired by the entity (90 days or less from date of purchase) that they represent insignificant risk of changes in value.