Answer (D) is correct . The acid test (quick) ratio consists of the quick assets (cash, marketable securities, and net accounts receivable) divided by current liabilities. Thus, the numerator consists of those assets that are more liquid than inventory.
Answer (A) is incorrect because Reducing cash is the normal way of paying current liabilities.
Answer (B) is incorrect because The acid test measures the liquidity of assets on hand, not the ability to borrow funds.
Answer (C) is incorrect because Accounts receivable are in the numerator of the acid test ratio; the ability to collect them is crucial.
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