Answer:
d) Prepaid expensand inventory are excluded from the calculation of the acid-test ratio.
Explanation:
The acid-test can be regarded quick ratio, this ratio makes the comparison between most short-term assets of a company and most short-term liabilities of the company in order to ascertain if there is enough cash for the company to pay immediate liabilities in the company. These immediate liabilities could be short-term debt. There is usually disregards of current assets by acid-test ratio which it's liquidation is difficult example is inventory.
Current ratio can be regarded as ratio that compares current assets of a company and the current liabilities. It can be gotten by finding ratio of current assets of the company and current liabilities. liquidity of a company can be measured using current ratio by potential creditors.
It should be noted that The acid-test ratio differs from the current ratio in that Prepaid expensand inventory are excluded from the calculation of the acid-test ratio.
