- immediately realizable money that can be obtained in an exchange of goods or services.
- financial instruments of high liquidity and safety. Examples are a treasury bill and a money market fund.
- in preparing the statement of cash flows, short-term,highlyliquidinvestment having an original maturity of three months or less.
a form of payment that is just like cash, such as a traveler's check or cashier's check.
the conversion of the price of property that sold with either favorable or unfavorable financing into the price the property would have sold for had the seller accepted all cash in the transaction.
Example: A tract of land sold for $100,000, with $25,000 cash and a $75,000 note to the seller at 6% interest with 20-year amortization. The market interest rate was 12% for such a mortgage. Although the mortgage carries a $75,000 face value, it is worth only $49,000. Therefore, the seller received a cash equivalent price of $74,000 ($25,000 cash plus a mortgage worth $49,000) in the transaction. This is much less than the $100,000 amount of sales price.
