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Question
What are 'Quick Assets' and 'Quick Liabilities' ? Explain with an example.
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Solution
Dear Student,
All the current assets excluding inventory and prepaid expenses are Quick assets. These assets can be converted into cash within very less period of time. Eg: Cash, accounts receivable,etc .
There is no such term of "Quick liabilities". Liabilities are broadly classified into three types: Current liabilities, non current liabilities, and contingent liabilities.
Both in current ratio and quick ratio, we use current liabilities only.
Current liabilities are short term debts or obligations that are payable within an year. Eg: interest payable, short term loans, etc.
Regards
All the current assets excluding inventory and prepaid expenses are Quick assets. These assets can be converted into cash within very less period of time. Eg: Cash, accounts receivable,etc .
There is no such term of "Quick liabilities". Liabilities are broadly classified into three types: Current liabilities, non current liabilities, and contingent liabilities.
Both in current ratio and quick ratio, we use current liabilities only.
Current liabilities are short term debts or obligations that are payable within an year. Eg: interest payable, short term loans, etc.
Regards
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