CAF-1 · Chapter 14 · Question 15 of 15
When preparing a cash flow statement, an entity discovers it has a 45-day treasury bill. How should this be classified?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) As a cash equivalent.
Explanation
Treasury bills with a short maturity (typically 3 months or less from acquisition) are highly liquid and subject to insignificant risk of value change, so they are classified as cash equivalents.
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