What does cash equivalents mean on the CPA exam?
Cash equivalents. Short-term, highly liquid investments readily convertible to known amounts of cash and so near maturity that interest rate changes pose insignificant risk. Generally only an original maturity of three months or less qualifies, measured from when the entity acquired it.
Defined against ASC 230-10-20.
Which CPA exam sections use cash equivalents?
Cash equivalents appears in the FAR section of the CPA exam.
Other terms defined against ASC 230-10
- statement of cash flows: The statement that explains the change in cash by sorting it into operating, investing and financing activity.
Other names for cash equivalents
cash equivalent
Related terms
- significant risk: A risk of material misstatement that warrants special audit attention because of its likelihood or its size.
- accretion expense: The increase in an asset retirement obligation from the passage of time, measured by the interest method at the credit-adjusted risk-free rate in effect when the liability was first measured.
- goodwill: An asset representing the future economic benefits of acquired assets not separately identified, measured as consideration less identifiable net assets.
- capital gain net income: Capital gains minus capital losses for the year, long-term and short-term combined.
- net capital gain: Net long-term capital gain minus net short-term capital loss.
- financial statements: The formal set an entity publishes: balance sheet, income statement, statement of cash flows, statement of changes in equity, and the notes.