Which of the following account balances would not be used in the calculation of the current ratio?
A) Inventory
B) Accounts payable
C) Sales revenue
D) Prepaid insurance

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. Therefore, only current assets and current liabilities are used in the calculation. Sales revenue is not a balance sheet item and therefore not included. Therefore, choice C (Sales revenue) would not be used in the calculation of the current ratio, while choices A (Inventory), B (Accounts payable), and D (Prepaid insurance) would be included as current asset or current liability balances.

Which of the Following Account Balances Would Not Be Used