Asked by Jaydan MacMaster on May 08, 2024
Verified
Which of the following account balances would not be included in the calculation of the current ratio?
A) Accounts receivable.
B) Short-term investments.
C) Equipment.
D) Supplies.
Current Ratio
The current ratio is a financial metric used to evaluate a company's ability to pay its short-term obligations, calculated by dividing current assets by current liabilities.
Accounts Receivable
Represents the money owed to a company by its customers for products or services that have been delivered but not yet paid for.
Equipment
Equipment encompasses tangible assets, excluding land and buildings, that are used in operations and have a useful life beyond a single accounting period, such as machinery and vehicles.
- Evaluate the effect of transactions on a company's current ratio.
Verified Answer
Learning Objectives
- Evaluate the effect of transactions on a company's current ratio.
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