Cash and cash equivalents
In one sentenceCash on hand and in current bank accounts, together with very short-term investments that are easy to convert into a known amount of cash with an insignificant risk of change in value.
Simply put
This is the item the statement of cash flows starts and ends with. It includes cash equivalents, such as deposits that mature within a short period (usually three months or less from the date of deposit).
A one-year deposit is not a cash equivalent, but a short-term investment shown separately.
Worked example
A restaurant has 20,000 SAR in its cash box, 180,000 SAR in its current account, a three-month deposit of 100,000 SAR, and a one-year deposit of 200,000 SAR.
Cash on hand20,000
Current account180,000
Three-month deposit100,000
One-year deposit (not counted here)—
Cash and cash equivalents = 20,000 + 180,000 + 100,000300,000 SAR
Don't confuse it with
CashCash is the cash itself, and "equivalents" adds very short-term investments to it.