What is a Certificate of Deposit (CD) categorized as?

A Certificate of Deposit (CD) is categorized as a cash asset because it represents a time deposit held at a financial institution with a fixed term and interest rate. When individuals invest in a CD, they are essentially lending their money to the bank for a specific period, in return for interest. This makes it an asset to the individual or entity that owns it, as it has a defined monetary value that can be accessed (with penalties for early withdrawal) upon maturity. This classification is crucial for financial statements, as it reflects the liquidity and available resources of the investor.

The other options do not accurately represent the nature of a CD. A type of liability refers to obligations that an entity owes to others, while a CD is owned by the depositor, not a liability. An investment account with no maturity does not apply to CDs, as they are defined by their fixed terms. Lastly, an expense category would relate to costs incurred by a business or individual, which CDs do not represent, as they generate income rather than incur expenses.