Which of the following is classified as a cash equivalent on the balance sheet?

Which of the following is classified as a

Multiple choice — select the best answer

AA 6-month Treasury bill purchased 2 months ago
BA money market account with a 90-day lock-up period
CA 3-month commercial paper purchased today
DA savings account that requires 30 days notice for withdrawal

✓ Correct answer: C. A 3-month commercial paper purchased today Cash equivalents are short-term, highly liquid investments with original maturities of three months or less. A 3-month commercial paper purchased today qualifies because its original maturity is 90 days or fewer. The 6-month T-bill was purchased when it had more than 3 months remaining.

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Topic: Assets & Liabilities

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Which of the following is classified as a cash equivalent on the balance sheet?

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