Cash Equivalents
Highly Liquid Short-Term Investments
Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash and are subject to insignificant risk of changes in value. They are acquired with an original maturity of three months or less.
Note
The original maturity—not the remaining maturity—determines whether an investment qualifies as a cash equivalent.
Summary
Cash equivalents provide temporary investment of excess cash while maintaining high liquidity.