Which statement below best describes the quick (acid test)ratio?
A)The acid test ratio considers only the most liquid assets: cash,accounts receivable,and temporary investments.
B)The current ratio includes only the assets most easily converted into cash.
C)The acid test adds merchandise inventory and prepaid expenses in the computation of current assets.
D)None of these answers are correct.

Question

Quizplus · Accepted Answer

The quick (acid test) ratio only considers the most liquid assets such as cash, accounts receivable, and temporary investments. It excludes inventory and other assets that may not be easily converted to cash.

Which Statement Below Best Describes the Quick (Acid Test)ratio