Question

Quick assets include which of the following?

• A. Cash
• B. Accounts Receivable
• C. Inventories
• D. Only (a) and (b)

Answer 1

The correct option is D Only (a) and (b)

The quick assets are defined as those assets which are quickly convertible into cash. While calculating quick assets we exclude the inventories at the end and other current assets such as prepaid expenses, advance tax, etc., from the current assets.

Cash and cash equivalents are the most liquid current assets items included in quick assets, while marketable securities and accounts receivable are also quick assets.

Whereas Quick assets exclude inventories, because it may take more time for a company to convert them into cash.