40.30.20.3 Cash Equivalent/Short-Term Investments

Cash equivalent investments must be purchased without premiums, discounts or accrued interest. See CLAM 40.30.10 for additional details.

Account Number	Name	Description
1000040	Non-LGIP Invest 0-90 Days	A cash equivalent investment is a highly liquid investment having a maturity of three months or less. It should be at minimal risk of a change in value. Examples of cash equivalents are bankers’ acceptances, certificates of deposit, commercial paper, marketable securities, money market funds, short-term government bonds, and treasury bills. To be classified as a cash equivalent, an item must be unrestricted, so that it is available for immediate use.
1000050	Investment with LGIP	When funds are deposited with the State Treasurer in the Local Government Investment Pool this account must be used since the balances in this account for colleges must agree with the balances shown by the Treasurer in the LGIP records.
1020010	Non-LGIP Invest 90-365 Days	Short-term investments (no premium, discount or accrued interest), also known as marketable securities or temporary investments, are financial investments that can easily be sold or converted to cash within 3-12 months. Some common examples of short-term investments include CDs, money market accounts, high-yield savings accounts, government bonds, and Treasury bills. Also includes short-term portion of long-term investments.
4120010	Investment Income	Earnings on deposits and investments. Investment earnings may also be coded by specific type for example dividend income (account 4120030), and capital gains and losses (account 4120050).

Also see CLAM 40.30.10.7 AND 40.30.10.8.

Illustrative Entries

Non-LGIP Invest 90-365 Days

Fund	Class	Dept	Method	Acct DR	Acct CR	Amount ($)
790	285	ddddd	AP Voucher	1020010	1000070	75,000.00

Interest income on all short-term investments (anticipated investment less than 365 days) should be recorded using account 4120010. The interest/cash should be distributed to each fund based upon its share of the investment.

Illustrative Entry

Investments 90-365 Days

Fund	Class	Dept	Method	Acct DR	Acct CR	Amount ($)
790	285	ddddd	AR Direct Journal	1000070	4120010	5,000.00

If the interest is reinvested, then the following entry should be recorded. In addition, each fund’s investment should be increased proportionately as well.