The Quick Ratio

question 36

Multiple Choice

The quick ratio

• A)excludes accounts payable
• B)excludes accounts receivable
• C)includes inventory
• D)includes cash and cash equivalents

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Definitions:

Uncollectible Accounts

Accounts receivable that are considered unlikely to be collected and therefore written off as an expense to the business.

Allowance Method

An accounting technique used to estimate uncollectible accounts receivable and adjusting the books accordingly.

Bad Debts

Accounts receivable that are considered uncollectible, leading to a financial loss for the company.

Specific Customers

This refers to identified individual or business customers with unique needs or characteristics that a company targets or serves.