Final answer:
Cash equivalents are short-term investments that are considered highly liquid and include those with maturities of three months or less from the date of acquisition, such as treasury bills, commercial paper, and marketable securities.
Step-by-step explanation:
Cash equivalents include short-term investments that are highly liquid and are easily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value. They are typically investments with original maturities of three months or less from the date of acquisition. So, the direct answer to the question 'Cash equivalents include short term investments within:' is three months of their due date.
Liquidity is a key concept in understanding cash equivalents. Liquidity refers to the ease and speed with which an asset can be converted into cash. Cash itself is the most liquid asset, as it does not need to be converted and can be immediately used for transactions. For something to be considered a cash equivalent, it should be able to be quickly converted to cash, like treasury bills, commercial paper, and marketable securities.
These assets are only considered cash equivalents if they are not held for investment purposes but rather for the purpose of meeting short-term cash commitments.