Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

Cash equivalents include short-term investments with original maturities of:

Six months or less

Three months or less

One year or less

Nine months or less

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Verified step by step guidance

Understand the concept of cash equivalents: Cash equivalents are 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.

Identify the key characteristic of cash equivalents: They must have an original maturity of three months or less from the date of acquisition. This is a standard definition under financial accounting principles.

Analyze the options provided in the problem: Review each option to determine which aligns with the definition of cash equivalents. Specifically, focus on the original maturity period mentioned in each option.

Eliminate incorrect options: Exclude options that mention maturities longer than three months (e.g., six months, nine months, or one year), as they do not meet the criteria for cash equivalents.

Select the correct answer: The option that specifies 'three months or less' is consistent with the definition of cash equivalents and should be chosen as the correct answer.