The Most Important Difference Between the 'Quick' and 'Current' Ratios

question 18

Multiple Choice

The most important difference between the 'quick' and 'current' ratios, in assessing an entity's short- term debt paying ability is:

• A) the inclusion of current receivables in one and not the other.
• B) the inclusion of inventory in one and not the other.
• C) the inclusion of prepayments in one and not the other.
• D) the inclusion of cash at bank in one and not the other.

---

Definitions:

General Ledger

A comprehensive record of a company's financial transactions over the life of the organization.

Paid Dividend

Refers to the portion of a company's earnings that has been distributed to shareholders as dividends.

Account Payable

Liabilities of a business that are owed to creditors for goods or services purchased on credit.