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Chapter Cash Flows 1. Explain what a cash equivalent is. 2. Why is depreciation considered a non-cash item 3. What types of f
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Answer #1

Cash Equivalent is short term investment in securities that are highly liquid and high credit quality. Example, Certificate of deposits, US Government Treasury bills.

Depreciation is a non-cash item because it is related to the fall in the value of assets because of normal wear according to useful of an asset. NO actual cash is involved in depreciation.

Footnotes made in cash flow statement:-

Non-cash financing and investing activities are shown in footnotes example leasing to purchase an asset, exchanging non-cash assets and liabilities with other non-cash assets and liabilities, issuing shares in exchange of assets, converting debt to equity.

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