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 quick ratio?
A)(3), (5),and (6)
B)(2), (5),and (7)
C)(2), (3),and (5)
D)(3), (5),and (7)

Question

Quizplus · Accepted Answer

The quick ratio is calculated by subtracting inventories (3) from current assets and then dividing by current liabilities. Prepaid insurance (2) and accumulated depreciation on buildings (5) are also excluded from this calculation because they are not liquid assets.

This Statement of Facts Is Presented for Problems 12 and 13