Cash and cash equivalent – meaning



Cash and cash equivalents (CCE) are the most liquid current assets found on a business’s statement of financial position. Cash equivalents are short-term commitments “with temporarily idle cash and easily convertible into a known cash amount”. An investment normally counts to be a cash equivalent when it has a short maturity period of 90 days or less, (any more than 90 days the asset is not considered as cash and cash equivalents) and can be included in the cash and cash equivalents balance from the date of acquisition when it carries an insignificant risk of changes in the asset value. Due to its susceptibility to misappropriation auditor is required to obtain sufficient and appropriate audit evidence with regard to cash and cash equivalent present at the client premises (cash in hand).

Leave a Comment

Your email address will not be published. Required fields are marked *

%d bloggers like this: