1 → CASH AND CASH EQUIVALENTS are assets that can be readily converted into cash within a short period, typically three months or less
2 → They are reported under the CURRENT ASSETS section of the balance sheet
3 → Cash includes PHYSICAL CURRENCY, such as banknotes and coins, held by a company
4 → CASH EQUIVALENTS are highly liquid investments with a short maturity period, typically 90 days or less from the date of purchase
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5 → Examples of CASH EQUIVALENTS include TREASURY BILLS, COMMERCIAL PAPER and MONEY MARKET FUNDS
6 → CASH AND CASH EQUIVALENTS serve as a measure of a company's liquidity and its ability to meet short-term obligations
7 → They are usually the most LIQUID ASSETS a company holds
8 → The balance of CASH AND CASH EQUIVALENTS can fluctuate over time due to cash inflows and outflows from various business activities
9 → CASH AND CASH EQUIVALENTS are typically recorded at their FACE VALUE, which is the amount printed on the currency or the stated value of the investment
10 → Companies may restrict the use of CASH AND CASH EQUIVALENTS for specific purposes, such as maintaining minimum cash balances or for certain investment
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