Cash equivalents refers to:

(A) Demand deposits with Bank
(B) Bills receivables
(C) Treasury bill
(D) Commercial Paper
(E) Marketable Securities

Choose the correct answer from the options given below:

(A), (C), (D) and (E) only

The correct answer is option 1- (A), (C), (D) and (E) only.

The cash flow statement presents the cash inflows and outflows, including cash and cash equivalents, from various activities of a business over a specific period. According to Accounting Standard 3 (AS-3), 'Cash' encompasses physical cash on hand and demand deposits held in banks. 'Cash equivalents' refer to short-term, highly liquid investments that can be quickly converted into known amounts of cash with minimal risk of value fluctuations. Typically, an investment qualifies as a cash equivalent when it has a short maturity period, often three months or less from the acquisition date. Investments in stocks are not considered cash equivalents, unless they meet specific criteria. For instance, preference shares that are acquired shortly before their scheduled redemption date, provided there's minimal risk of the company failing to repay the amount upon maturity, can be treated as cash equivalents. Similarly, short-term marketable securities that can be readily converted into cash without significant changes in their value are also considered cash equivalents. These investments must be highly liquid and easily convertible into cash.

Thus, The correct answer is (A), (C), (D) and (E) only.

(A) Demand deposits with Bank: This is correct. Demand deposits like checking accounts are readily accessible and highly liquid, meeting the definition of cash equivalents.

(B) Bills receivables: This is incorrect. Bills receivables are short-term promissory notes that represent a promise to pay a certain amount at a future date. While they are expected to be converted into cash soon, they are not considered cash equivalents because they are not immediately accessible. Bills receivables are included in current assets of the company.

(C) Treasury bill: This is correct. Treasury bills are short-term government debt instruments that mature in less than a year. They are issued for any time period like 14 days, 91 days etc. They are highly liquid and considered safe investments, making them a type of cash equivalent.

(D) Commercial Paper: This is correct. Commercial paper is a type of unsecured, short-term debt instrument issued by corporations. They are highly liquid and considered safe investments for large institutions, making them a type of cash equivalent.

(E) Marketable Securities: This is correct. Marketable securities refer to investments that can be readily bought and sold in the market. Some types of marketable securities, like short-term government bonds or money market funds, have high liquidity and low risk, making them qualify as cash equivalents.