Short-term investments are (1) readily marketable and (2) intended to be convert

Question

Short-term investments are (1) readily marketable and (2) intended to be converted into cash after the current year or operating cycle, whichever is longer. (1) readily marketable and (2) intended to be converted into cash within the current year or operating cycle, whichever is longer. (1) readily marketable and (2) intended to be converted into cash within the current year or operating cycle, whichever is shorter. (1) readily marketable and (2) intended to be converted into cash after the current year or operating cycle, whichever is shorter.

Explanation / Answer

(1) readily marketable and (2) intended to be converted into cash within the current year or operating cycle, whichever is shorter Short-term investments are readily marketable securities (stocks and bonds) that are intended to be sold within the time period of current assets. Logically, short-term investments are classified as current assets. Security investments have to meet the following two (2) criteria to be classified as short-term investments:

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