Doubts

SOLUTION They are treated as Current assets because if the expenditure for such expenses had not been incurred, cash would have to be spent in the near future.

SOLUTION Inventory is excluded from liquid assets because:(i) there is uncertainty whether it will be sold or not and at what price it will be sold; (ii) it will take…

SOLUTION Sale of Inventory at Cost Price.

SOLUTION (i) Working Capital Turnover Ratio and (ii) Trade Receivables Turnover Ratio.

SOLUTION Yes, if there are no prepaid expenses and inventory in the business.

SOLUTION Basis of DistinctionCurrent RatioQuick RatioRelationshipIt Indicates relation between Current Assets and Current Liabilities.It indicates relationship between Quick Assets and Current Liabilities

SOLUTION Liquid ratio is more dependable because it includes only those assets which can be easily and readily converted into cash. Inventory is not included in liquid assets because it…

SOLUTION Short-term financial position of the business is assessed by calculating current ratio and liquid ratio.

SOLUTION (i) Current Ratio and (ii) Quick Ratio.