Question

17a. Which one of the following would never be considered a cash equivalent? a. U.S. Treasury...

17a. Which one of the following would never be considered a cash equivalent?

a.

U.S. Treasury bills

b.

corporate commercial paper

c.

money market funds

d.

common stock issued by a corporation

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17B.

A company receiving payment of a $20,000 accounts receivable within 10 days with terms of 2/10, n/30, would record a sales discount of:

a.

10% of $20,000

b.

2% of $20,000

c.

(100% - 10%) x $20,000

d.

(100% - 2%) x $20,000

Homework Answers

Answer #1

17a. Optyion " d" Common stock issued by a corporation

Cash equivalents are investments securities that are meant for short-term investing; they have high credit quality and are highly liquid.

Here Common stock issued by a corporation comes under Equity Section but not Considered as Cash Equivalent.

17b. Option " b " 2% of $20,000

Generally Sales discount as percentage is applied on the sale price.

Therefore Sales discount on above Sales = 2% of $20,000

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