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16 September, 15:45

Cash equivalents are highly liquid investments that are bothA : money market funds and have a maturity date of one year or less. B : notes receivable and will be collected within one year. C : readily convertible and with a market value that is sensitive to changes in interest rates. D : readily convertible and very close to their maturity dates.

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  1. 16 September, 16:06
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    D : readily convertible and very close to their maturity dates.

    Explanation:

    Cash equivalents are current liquid assets and comprise cash in hand, cash at the bank, and short term investment whose maturity is in three months or less. A company's total value of cash and cash equivalents is recorded at the top line of the balance sheet as a current asset. They are the most liquid asset of a company.

    For an asset to be classified as a cash equivalent, it must have the ability to convert to cash easily. Its value should be relatively stable and be determined with ease. Cash equivalents indicate the financial strengths of a business and its ability to offset the current liabilities.
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