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Group statement of cash flows

Cash and cash equivalents

2.1 Definitions

Cash consists of cash in hand and deposits repayable upon demand,
less overdrafts.

Cash equivalents are ‘short-term, highly liquid investments that
are readily convertible to known amounts of cash and are subject
to an insignificant risk of changes in value’ (IAS 7, para 6).

A common exam question is to discuss whether an item meets the definition of a
cash equivalent.

Illustrations and further practice

Now try TYU question 1 from Chapter 24.

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