Question : Short-term investments are considered as Cash and Cash Equivalent. Hence, they do not affect cash flows and are therefore not considered while preparing cash flow statements.
Option 1: True
Option 2: False
Option 3: Can't say
Option 4: None of the above
Answer (1)
22nd Jan, 2024
Correct Answer: True
Solution : Answer = True
Short-term investments are considered as cash equivalents if they are readily convertible to known amounts of cash and have maturities of three months or less from the date of acquisition. They do affect cash flows and are included in the cash flow statement under cash and cash equivalents.
Hence, the correct option is 1.
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