Which of the following is a cash and cash equivalent while preparing a cash flow statement of the company?
A) Credit sales
B) Cash received from debtors
C) Bank balance
D) Sale of building
E) Issue of share capital
F) Short-term deposits in bank
G) Dividend paid
H) Interest paid on long-term debentures
I) Investment in marketable securities
J) Income tax paid

CFI

A cash flow statement showcases the inflows and outflows of cash and cash equivalents stemming from diverse activities within an enterprise during a specified timeframe. According to AS-3, the term 'Cash' encompasses both physical cash on hand and demand deposits held with banks. On the other hand, 'Cash equivalents' refer to short-term, highly liquid investments that can be promptly converted into known cash amounts. These investments also carry an insignificant risk of encountering value fluctuations. To qualify as cash equivalents, an investment typically must possess a brief maturity period, often around three months or less from the date of acquisition. It's important to note that investments in shares are generally not considered as cash equivalents, unless they fall within the category of substantial cash equivalents. An example of this exception includes preference shares acquired shortly before their predetermined redemption date, assuming there is minimal risk associated with the company's ability to repay the amount upon maturity. Furthermore, short-term marketable securities that can be swiftly transformed into cash are also classified as cash equivalents. This classification is upheld when the conversion to cash can be swiftly executed, and the resultant change in value is insignificant. This underscores the immediate liquidity and relatively stable nature of such assets.