Question

The term cash equivalent refers to:

a. An item such as a money order, travelers' check, or check from a customer.
b. An account receivable from a reliable customer who has always paid bills within the discount period.
c. Very liquid short-term investments such as U.S. Treasury Bills and commercial paper.
d. A guaranteed line of credit at the company's bank.

Answer 1

The term cash equivalent refers to:

c. U.S. Treasury Bills and commercial paper are very liquid short-term investments

Step-by-step explanation:

Cash equivalent: These are referred to type of investments which are done for a short duration or known as short-term investment.

This is highly liquid in nature and have a high quality of credit. These are the current assets which are most liquid and can be found as a balance sheet for most businesses.

In financial investing 'cash' and 'equivalents' are known as cash equivalents and they are the major assets together with the bonds and the stocks.

Examples of cash equivalents :

• Government papers
• Treasury bills
• Economic papers
• Money market holdings
• Marketable securities

These all come under the examples of cash equivalents.

Therefore, here from the given options cash equivalent refers to :

c. U.S. Treasury Bills and commercial paper are very liquid short-term investments