alleryStart learning →AS 3 describes cash equivalents as
ALong-term investments held for growth
BShort-term liquid investments of low risk
CListed equity shares held for dividends
DTrade receivables due within one year
Answer & Solution
Correct answer: B. Short-term liquid investments of low risk
Cash equivalents are short-term liquid investments that convert readily into known cash amounts with insignificant risk of value change.
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