Cash and cash equivalents (CCE) are assets that represent the money that a company can readily access. This includes physical cash, such as funds held in a business's tills or safes, and deposits in current or savings accounts within financial institutions. In addition to physical cash, cash equivalents are short-term investments that are highly liquid, like Treasury bills, money market funds, or other instruments that can be quickly converted into cash.

The importance of cash and cash equivalents lies in their role in liquidity management. Businesses monitor their CCE to ensure they have sufficient liquidity to meet immediate obligations like paying suppliers, employees, or utility costs. For example, a company's balance sheet might show $50,000 in cash and $25,000 in cash equivalents, demonstrating the total funds readily available for operational needs.

In accounting, cash and cash equivalents are categorized as current assets because they can be used or liquidated within a short period. Accurate reporting of CCE is crucial during month-end processes and balance sheet reconciliation to ensure financial records are up-to-date and reflect true liquid asset levels.