Practice prompt · Q:receivables-notes-credit-losses-and-transfers/cash-and-equivalents-classification-001

Sort instruments into cash and its neighbors

Tests whether the learner applies the original maturity test and separates restricted amounts from unrestricted cash.

Updated Sep 11, 2026 Review due Nov 18, 2026

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At December 31 a company holds a 90-day Treasury bill bought in November and a 5-year Treasury bond bought four years and ten months ago. It also holds 50,000 it must keep on deposit under a loan agreement, and 200,000 the board set aside for a plant opening in three years.

Every liquidity ratio a reader computes starts from this line, so what is allowed into it decides what those ratios mean.

Choose the best answer. a The bill is a cash equivalent; the bond is not; the 50,000 is reported separately; the 200,000 is noncurrent. b Both the bill and the bond are cash equivalents, because each has three months or less left to run. c The bill is a cash equivalent and all 250,000 of restricted amounts are current assets. d The bill is a cash equivalent and the 50,000 is included in unrestricted cash because the company still owns it.

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Answer: a

Choice a. Original maturity decides the first two, and the date the restriction lifts decides the last two.