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Cash equivalents are held for the purpose of meeting long-term cash commitments.TRUE/FALSE

Cash equivalents are held for the purpose of meeting long-term cash commitments.TRUE/FALSE

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False statement, that is the cash equivalents are held for the purpose of meeting long-term cash commitments. The true statement is that the cash equivalents are held for the purpose of meeting short term cash commitments and not long-term cash commitments.The cash equivalents is used for daily needs for the organization and not making investment purpose. Cash equivalents includes those elements that can easily convertible in cash and can use easily in short period of time when it is needed. Therefore ,cash equivalents is included in the category of current assets. So given statement is false.

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