Q.Current assets excluding inventory and prepaid expenses is called :

Current assets minus inventory and prepaid expenses are the quick (liquid) assets used to test immediate solvency — option (c).

Current assets include cash, bank, debtors, bills receivable, short-term investments, inventory and prepaid expenses. Of these:

• Inventory (closing stock) is excluded because it must first be sold before it becomes cash, so it is not readily liquid.
• Prepaid expenses are excluded because they are already-spent amounts that will be received back as a service, not as cash. …