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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Which of these is considered a quick asset?

  1. (a) Merchandise Inventory
  2. (b) Accounts Receivable
  3. (c) Office Equipment
  4. (d) Prepaid Insurance

To determine

Identify the option that is considered as a quick asset.

Explanation

Quick assets:

Quick assets provide the ability to pay off the instant debt obligations to the company. Quick assets are cash, marketable securities, and accounts receivables

Justification for the incorrect option of (a):

Merchandise inventory is a current asset. Therefore, it is an incorrect option.

Justification for the incorrect option of (c):

Office equipment is a long-term asset. Therefore, it is an incorrect option.

Justification for the incorrect option of (d):

Prepaid insurance is a current asset...

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