Which of the Following Are Excluded from the Numerator in the Calculation

question 59

Multiple Choice

Which of the following are excluded from the numerator in the calculation of the acid-test ratio?

• A) prepaid expenses and cash
• B) inventory and prepaid expenses
• C) inventory and short-term investments
• D) inventory and accounts receivable

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Definitions:

Time Period

A specific duration during which financial transactions are recorded and reported in financial statements.

Quality

The degree to which a product or service meets the requirements and expectations of customers.

Consistency

Use of the same accounting principles and methods from year to year within a company.

Accounting Principles

The rules and guidelines that companies follow in preparing financial statements, ensuring consistency and comparability.