The classification of an item as a cash equivalent means that changes in the balance:

A) will be disclosed in the statement of cash flows.
B) will not be disclosed in the statement of cash flows.
C) may be disclosed at discretion of the entity.
D) none of the above.

Cash equivalents are highly liquid investments that can be quickly converted into cash, typically with maturities of three months or less at the time of purchase. Changes in the balance of cash equivalents are not disclosed in the statement of cash flows as they are already part of the cash and cash equivalents balance.