[amp_mcq option1=”inventories” option2=”short-term investments” option3=”cash equivalents” option4=”long-term investments” correct=”option3″]<\/p>\n
The correct answer is: C. cash equivalents<\/strong><\/p>\n Cash equivalents are short-term, highly liquid investments that are readily convertible to cash and are essentially risk-free. Examples of cash equivalents include money market funds, treasury bills, and commercial paper.<\/p>\n Inventories are assets that a company holds for sale in the ordinary course of business. Examples of inventories include finished goods, work in progress, and raw materials.<\/p>\n Short-term investments are investments that a company expects to convert into cash within one year. Examples of short-term investments include marketable securities, such as stocks and bonds.<\/p>\n Long-term investments are investments that a company expects to hold for more than one year. Examples of long-term investments include land, buildings, and equipment.<\/p>\n Here is a table that summarizes the key differences between cash equivalents, short-term investments, and long-term investments:<\/p>\n | Characteristic | Cash equivalents | Short-term investments | Long-term investments | [amp_mcq option1=”inventories” option2=”short-term investments” option3=”cash equivalents” option4=”long-term investments” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-45862","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n
\n| — | — | — | — |
\n| Maturity | Less than one year | One year or less | More than one year |
\n| Liquidity | Highly liquid | Liquid | Less liquid |
\n| Risk | Essentially risk-free | Some risk | More risk |
\n| Accounting treatment | Reported as cash on the balance sheet | Reported as investments on the balance sheet | Reported as investments on the balance sheet |<\/p>\n","protected":false},"excerpt":{"rendered":"