Examples of cash equivalents (2024)

FAQs

What are some examples of cash equivalents? ›

Cash equivalents include U.S. government Treasury bills, bank certificates of deposit, bankers' acceptances, corporate commercial paper, and other money market instruments. These financial instruments often have short maturities, highly liquid markets, and low risk.

Cash equivalents are any short-term investment securities with maturity periods of 90 days or less. They include bank certificates of deposit, banker's acceptances, Treasury bills, commercial paper, and other money market instruments.

Cash equivalents are​ short-term, highly liquid assets. Money market​ funds, receivables and inventory are examples of cash equivalents. These investments are cash substitutes that companies can easily convert back into cash if needed in the operating cycle.

Recipients may prefer cashier's checks because: They're almost equivalent to cash, but the risk of theft is lower because only the payee can deposit a cashier's check. They're guaranteed. Unless a cashier's check is fraudulent, there's almost no risk that it will be declined, or "bounce."

Examples of items commonly considered to be cash equivalents are Treasury bills, commercial paper, money market funds, and federal funds sold (for an entity with banking operations). The definition presumes that all cash equivalents have two attributes: they must be (1) short-term and (2) highly liquid.

Cash and equivalents do not include investments in liquid securities like bonds, stocks, and derivatives. Even though such assets can be quickly converted to cash (usually within three days), they are nonetheless excluded. On the balance sheet, the assets are classified as investments.

Identify cash and cash equivalents: Look for the items on the balance sheet that qualify as cash and cash equivalents. These may include items like cash on hand, cash in checking or savings accounts, and short-term investments, including market funds or Treasury bills.

Which of the following is a popular cash equivalent? Option A: Commercial Paper is the correct answer...

Inventory that a company has in stock is not considered a cash equivalent because it might not be readily converted to cash. Also, the value of inventory is not guaranteed, meaning there's no certainty in the amount that'll be received for liquidating the inventory.

Which of the following is not considered a cash equivalent? ›

Expert-Verified Answer. Postdated checks are not considered a cash or cash equivalent because they are not immediately liquid. Hence, the correct option is a. Postdated checks are not considered cash or cash equivalent because they cannot be immediately liquidated or used until the date written on the check.

Generally only investments with original maturities of three months or less qualify under this definition. Items commonly considered cash equivalents are Local Government Investment Pool (LGIP) deposits, treasury bills, commercial paper, short-term deposits in financial institutions, and money market funds.

How to calculate cash equivalent sale price? Find the present value of the principal balance at the market rate. Add the PV of the payments to the PV of the principal balance and to the cash down payment. This equals the cash equivalent value or adjusted sale price.

Apple's operated at median cash and equivalents of 34.94 billion from fiscal years ending September 2019 to 2023. Looking back at the last 5 years, Apple's cash and equivalents peaked in September 2019 at 48.844 billion. Apple's cash and equivalents hit its 5-year low in September 2022 of 23.646 billion.

Cash equivalents are stored-value products such as gift certificates and gift cards. The IRS specifically defines these instruments as cash equivalents and states that their value is considered taxable income to the recipient, regardless of dollar value.

Cash equivalents are assets that are like cash and are easily turned into cash. U.S. Treasuries, gold, and silver bullion are the best examples of cash equivalents. Bullion products are considered currency agnostic.