Identify the option, of which cash and cash equivalent comprises as per AS-3, in addition to cash in hand, from the following?
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This question was previously asked in
Shift 01/06/2023 8:30 AM - 11:30 AM
A
Short term loans and advances
B
Trade Receivables
C
Demand Deposits
D
Non-Trade Investment
Correct Answer
Demand Deposits
Detailed Explanation
As per Accounting Standard 3 (AS-3) on Cash Flow Statements, cash and cash equivalents include cash in hand and demand deposits. Demand deposits are short-term, highly liquid investments that are easily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
So, among the options you provided, (3) Demand Deposits is the one that comprises cash and cash equivalents as per AS-3, in addition to cash in hand.
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