The correct answer is Both A and R are correct and R is the correct explanation of AImportant Points Assertion A : Quick ratio is a more penetrating test of liquidity than the current ratio, yet a high quick ratio does not necessarily imply sound liquidity. Explanation:The quick ratio is a tougher test of liquidity than the current ratio. It eliminates certain current assets such as inventory and prepaid expenses that may be more difficult to convert to cash. The higher the ratio, the more liquid it is, and the better able the company will be to ride out any downturn in its business. A high quick ratio does not always mean that a company enjoys sound liquidity. Hence, the Assertion is true. Reason R : A company with a high value of quick ratio can suffer from a shortage of funds if it has slow-paying, doubtful and long duration outstanding debtorsExplanation:A company with a high value of quick ratio can suffer from a shortage of funds if it has slow-paying, doubtful and long duration outstanding debtors. A quick ratio that is too high means that some of your money is not being put to work. This indicates inefficiency that can cost your company profits. If your accounts receivable is difficult to collect, you will want to raise your quick ratio by putting aside additional cash. Hence, Reason is also true and correct explanation of Assertion.