Question

At year end ABC Company had the following on December 31, 2018:

       Currency and coin on hand                                                        $500         

       Checking account balance                                                           900        

       Money Market account balance                                                1,000

       IOU’s from employees                                                                 100

       Certificate of Deposit, originating 12/1/18, due 2/1/19            2,000

       6 month Treasury Bill, purchased 9/30/18                                3,000

       GE Stock, purchased 12/1/18, planning to sell 1/31/19            1,500

       What amount should ABC report as the balance in the Cash and Cash Equivalents   

       account at year end, December 31, 2018?

		$4,500
		$5,900
		$8,900
		$2,500
		$4,400

Answer 1

Out of all, these are the ones which will not be treated as cash or cash equivalends:

- 6 month Treasury bill cannot be treated as cash equivalent since the maturity period is beyond 3months

- Stock cannot be treated as cash equivalent since it is a risky investment and doesn't fulfil the criteria of Cash Equivalent.

- IOU's as well since they are advances to employees and cannot be considered as Cash Equivalents. IOU's cannot be considered as Petty cash

Rest all will be counted and total will be $4,400. Option 5 is correct.