Cash Equivalents Definition - What are Cash Equivalents?

Cash equivalents definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Cash equivalents can be defined as: Short-term investment assets that are readily convertible to a known cash amount or sufficiently close to their maturity date (usually within 90 days) so that market value is not sensitive to interest rate changes. When looking at the line item on a balance sheet we generally see cash and cash equivalents. This line item will include all cash items but will also include cash equivalent items. Cash items include currency, checking accounts and savings accounts. Cash equivalents include accounts that are highly liquid. Cash equivalents can include some securities and short-term government bonds. Why Learn Accounting - Financial Accounting / Managerial Accounting    • Why Learn Accounting - Accounting Beginners   101 Double Entry Accounting System Explained - Accounting Equation    • Double Entry Accounting System Explained 1...   101 Cash vs Accrual - Cash Method / Accrual method differenc    • 101 Cash vs Accrual - Cash Method / Accrua...   101 Revenue Recognition Principle    • 101 Revenue Recognition Principle   Double Entry Accounting System Explained - Balance Sheet    • Double Entry Accounting System Explained -...   101 Income Statement Introduction    • 101 Income Statement Introduction   101 Accounting Objectives - Relevance Reliability Comparability    • 101 Accounting Objectives - Relevance Reli...   101 Transaction Rules - Accounting Equation    • 101 Transaction Rules - Accounting Equation   101 Transaction Throught Process / Steps - Accounting Equation    • 101 Transaction Thought Process / Steps - ...   101 Owner Deposits Cash Transaction Accounting Equation    • 101 Owner Deposits Cash Transaction Accoun...   101 Work Completed for Cash Transaction Accounting Equation    • 101 Work Completed for Cash Transaction Ac...   100.110 Pay Employee with Cash Transaction Accounting Equati    • 100.110 Pay Employee with Cash Transaction...   200 Debits & Credits Normal Balance - Double Entry Accounting Sy    • 200 Debits & Credits Normal Balance - Doub...   200 Debits & Credits - One Rule to Rule Them All    • 200 Debits & Credits - One Rule to Rule Th...