Firm Reporting Cash or Cash Equivalents as a Long-Term Asset

Under What Condition Would a Firm Report Cash or Cash Equivalents as a Long-Term Asset?

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Question

Under what condition would a firm report cash, or cash equivalents as a long-term asset?

Answers

A. When a firm maintains less than its' minimum target cash balance.

B. When funds are set aside for a specific long-term purpose such as plant expansion.

C. All of these answers.

D. When a firm has an under-funded pension obligation.

E. None of these answers. B

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Explanations

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A. B. C. D. E.

Explanation

A firm may maintain cash equivalents that are earmarked for plant expansion, sinking fund payments, or other long-term uses. In these situations many firms would report this portion of its cash, or cash equivalents as long-term because these funds are not available in the daily operation of the business.

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