Asked by Danielle Szajdek on Jul 03, 2024
Verified
Equity Investments (in common shares) are normally classified as cash equivalents.
Equity Investments
Financial assets representing ownership interest in a company, including stocks, which provide dividends and potential capital gains.
Cash Equivalents
Short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
- Understand the classification and management of cash equivalents and their impact on a company's liquidity.
Verified Answer
ZK
Zybrea KnightJul 06, 2024
Final Answer :
False
Explanation :
Equity Investments (in common shares) are not normally classified as cash equivalents because they do not have a short maturity date of three months or less from the date of acquisition, which is a key characteristic of cash equivalents.
Learning Objectives
- Understand the classification and management of cash equivalents and their impact on a company's liquidity.
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