BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Fund set aside for acquisition of equipment and machinery.
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Fund set up in a bank exclusively for payment of employees’ compensation.
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Fund for the redemption of preference shares.
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Fund established for settlement of long-term obligations.
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Detailed explanation-1: -Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company’s assets that are cash or can be converted into cash immediately. Cash equivalents include bank accounts and marketable securities, which are debt securities with maturities of less than 90 days.
Detailed explanation-2: -What are Cash Equivalents? Cash includes legal tender, bills, coins, checks received but not deposited, and checking and savings accounts. Cash equivalents are any short-term investment securities with maturity periods of 90 days or less.
Detailed explanation-3: -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.
Detailed explanation-4: -Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash flows are inflows and outflows of cash and cash equivalents.