Which of the following accounts should not be included in the calculation of the quick (or acid-test) ratio?
A) Accounts payable
B) Accounts receivable
C) Cash
D) Inventory

Question

Quizplus · Accepted Answer

The quick (or acid-test) ratio is a measure of a company's short-term liquidity, and it measures a company's ability to pay off its current liabilities using only its most liquid assets. Therefore, inventories are excluded from the calculation since they are not considered to be highly liquid assets that can be easily converted into cash. Accounts payable, accounts receivable, and cash are all included in the calculation of the quick ratio.

Which of the Following Accounts Should Not Be Included in the Calculation