Which of the following is a 'Cash Equivalent'? MCQ with Answer and Explanation

Which of the following is a 'Cash Equivalent'?
A. Short-term, highly liquid investments with maturity 3 months or less
B. Bank deposits with maturity more than 12 months
C. Inventory
D. Debtors
Answer: Option A
Solution (By JKSSB Mock Tests)
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Accountancy and Book Keeping Questions

Question #1
The term 'IFRS' stands for:
A. International Fiscal Reporting Standards
B. Indian Financial Reporting Standards
C. Indian Fiscal Reporting System
D. International Financial Reporting Standards

Correct Answer: Option D


Explanation:
IFRS stands for International Financial Reporting Standards, issued by IASB.

Question #2
Which accounting principle justifies treating a calculator as an expense rather than a fixed asset?
A. Going Concern
B. Dual Aspect
C. Materiality
D. Consistency

Correct Answer: Option C


Explanation:
The Materiality principle states that trivial costs (like a calculator) should be expensed immediately rather than capitalized and depreciated, due to their immaterial impact.

Question #3
In the absence of a partnership deed, profits are shared:
A. Equally
B. Based on age
C. Based on experience
D. In the ratio of capital

Correct Answer: Option A


Explanation:
As per Indian Partnership Act, 1932, in absence of a deed, profits and losses are shared equally among partners.