Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. why are inventories and prepaid expenses excluded

Why are inventories and prepaid expenses excluded in computing the acid-test ratio?

60.1K

Verified Solution

Question

Accounting

Why are inventories and prepaid expenses excluded in computingthe acid-test ratio?

Answer & Explanation Solved by verified expert
3.8 Ratings (434 Votes)
Ans Acid test ratio is also known as Quick Ratio which is calculated by dividing Quick assets and Current LiabilitiesThis is a liquidity ratio which indicates the companys ability to meet its short term obligation Now the Quick assets are those current assets which can easily be    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

describe glottal vibratory cycle

Medical Sciences
1.2K views

Which of the following describes an apical symport system in the membrane of a renal tubule...

Biology
1.2K views

What fiscal policy might the government enact to help curb increasing unemployment Increase business taxes...

Physics
1.2K views

Two similar spheres are not experiencing any force initially Now when 10 3 electrons ar...

Geometry
1.2K views

ANALYZING RELATIONSHIPS In the diagram JKLM EFGH Find the values of x y and z...

Statistics
1.2K views

A company produces precision 1 meter 1000 mm rulers The actual distribution of lengths of...

Algebra
1.2K views

4. Use the properties of logarithms to evaluate the expression. Show your work.

Accounting
1.2K views

DLW Corporation acquired and placed in service the following assets during the year: (Use MACRS...

Accounting
1.2K views

As of December 31 of the current year, Armani Company's records show the following. ...

Accounting
1.2K views

Advanz enterprises has its pharmaceutical product manufacturing affiliate in the USA and its sales affiliate...

Accounting
1.2K views

A company makes bikes from recycled metal. For a recent job lot of 200 bikes,...

Accounting
1.2K views

Sweeten Company had no jobs in progress at the beginning of the year and no...