Cash Equivalents

Investment securities that are short-term, have high credit quality and are highly liquid.

Also referred to as "cash and equivalents".

Investopedia Says:
Cash equivalents are one of the three main asset classes, along with stocks and bonds. These securities have a low-risk, low-return profile. Cash equivalents include U.S. government Treasury bills, bank certificates of deposit, bankers' acceptances, corporate commercial paper and other money market instruments.

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Instruments or investments of such high liquidity and safety that they are virtually as good as cash. Examples are a Money Market Fund and a Treasury Bill. The Financial Accounting Standards Board (FASB) defines cash equivalents for financial reporting purposes as any highly liquid security with a known market value and a maturity, when acquired, of less than three months.

The Conversion of the price of Property that sold with either favorable or unfavorable financing into the price the property would have sold for had the seller accepted all cash in the transaction.
Example: A Tract of land sold for $100,000, with $25,000 cash and a $75,000 note to the seller at 6% Interest with 20-year Amortization. The market interest rate was 12% for such a mortgage. Although the mortgage carries a $75,000 Face Value it is worth only $49,000. Therefore, the seller received a cash equivalent price of $74,000 ($25,000 cash plus a mortgage worth $49,000) in the transaction. This is much less than the $100,000 amount of sales price.

1. Immediately realizable money that can be obtained in an exchange of goods or services.

2. Financial instruments of high liquidity and safety. Examples are a Treasury Bill and a Money Market fund.

3. In preparing the Statement of Cash Flows, a short-term, highly liquid investment having an original maturity of three months or less.