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      Question

      According to AS 3, "Cash Equivalents"

      are:
      A Long-term investments in equity shares. Correct Answer Incorrect Answer
      B Fixed assets that can be sold quickly. Correct Answer Incorrect Answer
      C Short-term, highly liquid investments readily convertible to known amounts of cash. Correct Answer Incorrect Answer
      D All current assets except inventory. Correct Answer Incorrect Answer
      E Only cash in hand. Correct Answer Incorrect Answer

      Solution

      Cash equivalents typically have a short maturity, such as three months or less from the date of acquisition.

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