Final answer:
The acid-test ratio is used to measure a company's ability to pay short-term obligations without selling inventory. Plant Assets are not included in the acid-test ratio calculation because they are long-term assets and not easily converted to cash. The correct answer to which account would not be used is Plant Assets.
Step-by-step explanation:
The acid-test ratio, also known as the quick ratio, is a financial metric used to evaluate a company's short-term liquidity. It measures the ability of a company to pay its current liabilities without relying on the sale of inventory. The formula for the acid-test ratio is:
Acid-test Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities
Based on the components of the formula, the correct answer to the question is C. Plant Assets. Plant assets are not included when calculating the acid-test ratio because they are considered long-term assets and are not easily liquidated to meet short-term obligations.
On the other hand, Cash and Accounts Receivable are part of current assets which are included in the acid-test ratio calculation. Current Liabilities are on the denominator of the ratio, representing the obligations that need to be met.