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    Question

    Which of the following does not qualify as a cash

    equivalent under AS 3?
    A 3-month Treasury bill Correct Answer Incorrect Answer
    B Bank Overdraft Correct Answer Incorrect Answer
    C Money market funds Correct Answer Incorrect Answer
    D Bank balance Correct Answer Incorrect Answer
    E Commercial paper (90 days) Correct Answer Incorrect Answer

    Solution

    cash equivalents are defined as: тАЬShort-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.тАЭ ┬атАЬBank overdrafts are generally considered a part of financing activities, unless they are repayable on demand and are an integral part of an enterpriseтАЩs cash management тАФ in which case, they can be included in cash and cash equivalents.тАЭ

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