Video: Introduction to Cash and Cash Equivalents

In this lesson, explore the foundational concepts of cash and cash equivalents as Nick Palazzolo, CPA, navigates the nuances separating cash from these liquid assets. He clarifies items like checks and checking accounts that bear the fluidity to be almost instantly converted into cash, thus termed cash equivalents. Delving into details, Nick outlines the criteria—such as the 90-day maturity rule—that classify assets like money market funds, commercial paper, and treasury bills as cash equivalents. The lesson also demystifies the often-misunderstood certificate of deposit, explaining how the initial maturity date determines its categorization. Whether it's the literal dollar bills or various forms of short-term investments, grasp the distinctions that are crucial for crisp financial reporting and analysis.