This statement of facts is presented for problems 12 and 13: A hospital's trial balance shows the following captions: (1)cash equivalents; (2)prepaid insurance on buildings; (3)inventory of medicines; (4)short-term investments; (5)accumulated depreciation on buildings; (6)current portion of long-term debt;and (7)accounts receivable.
-Which of these seven accounts do not enter into the calculation of the current ratio?
A)only (5)
B)only (6)
C)only (7)
D)(5)and (7)

Question

Quizplus · Accepted Answer

The current ratio is calculated as Current Assets / Current Liabilities. Accumulated depreciation on buildings (5) is neither a current asset nor a current liability, so it does not enter into the calculation of the current ratio.

This Statement of Facts Is Presented for Problems 12 and 13