A is corrent. The acid-test (quick) ratio is quick assets (cash, temporary investments in marketable equity securities, and net receivables) divided by current liabilities. The quick ratio measures the ability to pay current liabilities from cash and near-cash items. In this case, quick assets total $1,500 ($1,200 + $300) and current liabilities total $1,000 resulting in an acid-test ratio of 1.5 to 1 ($1,500/$1,000).
B is incorrect. The acid-test (quick) ratio is quick assets (cash, temporary investments in marketable equity securities, and net receivables) divided by current liabilities. The quick ratio measures the ability to pay current liabilities from cash and near-cash items. In this case, quick assets total $1,500 ($1,200 + $300) and current liabilities total $1,000 resulting in an acid-test ratio of 1.5 to 1 ($1,500/$1,000).
C is incorrect. The acid-test (quick) ratio is quick assets (cash, temporary investments in marketable equity securities, and net receivables) divided by current liabilities. The quick ratio measures the ability to pay current liabilities from cash and near-cash items. In this case, quick assets total $1,500 ($1,200 + $300) and current liabilities total $1,000 resulting in an acid-test ratio of 1.5 to 1 ($1,500/$1,000).
D is incorrect. The acid-test (quick) ratio is quick assets (cash, temporary investments in marketable equity securities, and net receivables) divided by current liabilities. The quick ratio measures the ability to pay current liabilities from cash and near-cash items. In this case, quick assets total $1,500 ($1,200 + $300) and current liabilities total $1,000 resulting in an acid-test ratio of 1.5 to 1 ($1,500/$1,000).
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