BU227 Chapter Notes - Chapter 5: Promissory Note, Cash Flow, Current Liability
Document Summary
Week 5: readily convertible to known amounts of cash, so near their maturity that there is little risk that their value will change if interest rates change. Cash equivalent a short-term, highly liquid investment with an original maturity of less than three months. The statement of cash flows explains how the cash balance at the beginning of the period hanged to another cash balance at the end of the period. The definition of cash includes cash and cash equivalents. An investment qualifies as a cash equivalent only when it has an original maturity of three months or less from the date of acquisition treasury bills, commercial papers. The statement of cash flows reports cash inflows and outflows based on three broad categories: 1. Statement of cash flows defines each category in the required statement. The cash inflows and outflows that directly relate to revenues and expenses reported on the income statement.
