Accountancy Part BCash Flow Statement

Identify the option, of which cash and cash equivalent comprises as p…

Identify the option, of which cash and cash equivalent comprises as per AS-3, in addition to cash in hand, from the following?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Demand Deposits

As per AS-3, cash comprises cash in hand and demand deposits with banks; cash equivalents are short-term, highly liquid investments.

NCERT (2026-27 edition):
Cash and Cash Equivalents – “… As per AS-3, ‘Cash’ comprises cash in hand and demand deposits with banks, and ‘Cash equivalents’ means short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.”