Misconception · MIS:three-month-remaining-maturity-makes-cash-equivalent

Mistaken idea “Three months of remaining maturity makes an investment a cash equivalent”

Mistaken reasoning: This mistake substitutes year end remaining maturity for the instrument's original maturity when acquired.

Updated Aug 21, 2026 Review due Nov 8, 2026

Why this is mistaken

The acquisition date and original maturity remain part of the cash-equivalent test. A short remaining term does not rewrite how the instrument entered the portfolio.

Where to watch

When this mistake may appear

  • Only two months remain before maturity.
Check your work

Your work may contain this mistake if:

  • Classifies an originally longer-term investment as cash equivalent at year-end.