Cash Flow

Cash and Cash Equivalents

Cash Equivalent

What is Cash  and Cash Equivalent?

Cash is a form of money, an instrument, and a legal tender or also called currency. The most common form is coins and notes issued by the central bank of the country. Value of these instruments are fixed and printed on the paper or coin and value of it remain constant.

A Cash equivalent Refer to highly liquid investment which can be mature within 3 months from the date of acquisition. Here means from the purchase to redemption period should be less than 3 months. Whose value and date of maturity is confirmed. Cash Equivalent is an import part in a statement of cash flow.

On the other hand gold or other types of coins not issued by the government come into cash equivalent category of cash. Its maturity should be less than 3 months.Basically alternative of cash are those which can be used or held for the sole purpose of meeting routine operating matters, instead of with the target financing or investing purpose.

Types of Cash Equivalent

  • Treasury Bills
  • Commercial Papers
  • Marketable Securities
  • Money Market Funds
  • Short-Term Government Bonds
  • Bank Borrowing

What are the Synonyms of Cash

  • Currency
  • Note
  • Coinage
  • Funds
  • Money Order
  • Postal Order
  • Money
  • Security
  • Coin
  • Bread
  • Bill

History of Cash

As you know that history of trading is a barter system, People buy one thing/items against the 2nd items. Here there was no use of Cash; in barter trade system one may provide services against the things and items or vice versa. Value of it depends on the need or conversation or debate. No doubt they have faced so many difficulties for getting one thing as per their needs. It’s because there was no system for the valuation of things for purchasing or selling.
With the passage of time, there is change. As today everyone is in search of the quick and best solution to the problems. Innovation and smart system facilitate the peoples and create new ways.

Modern Era of Cash

Cash now replacing bank checks, Debit and credit cards, and now digital currency also comes into existence. People feel more secure with these instruments. Keeping bulk notes in pocket more hectic and coins are too difficult for handing in routine business.

Types of Modern Cash

  • Metallic Cash, This type of cash is coins.
  • Paper Cash, General use of cash in the form of Note.
  • Digital Cash, Debit, Credit, Visa, Master Cards are the type of Digital Cash.