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Explain the difference between cash and cash equivalents.

Explain the difference between cash and cash equivalents.

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Cash :- Cash is form of currency in form of coins and notes of particular country. It commonly used in business transaction.In Balance sheet , Cash includes cash in hand and cash deposited in bank .

Cash equivalents :- These are Short term investment in market securities having high Credit quality , easily negotiable and liquiditable which maturity period are 1years or less. These are acceptable and used in payment and others business transaction like cash . These marketable securities are Treasury bills, Certificate of Deposit, Corporate commercial papers money market mutual fund etc .

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