10 free CPA practice questions in the real exam format, covering the official content areas, with an explanation for every answer.
CPA Practice Test 1Tutor mode
Question 1 of 10
Financial Reporting
Kessler Tool Co. reported the balances below at December 31, Year 2. On January 20, Year 3, before its Year 2 financial statements were issued, Kessler replaced the $300,000 note with a five-year note payable to the same bank. What is Kessler’s current ratio at December 31, Year 2?
Kessler Tool Co. — selected balances, December 31, Year 2
Account
Amount
Cash
$75,000
Accounts receivable, net
$180,000
Inventory
$160,000
Prepaid insurance (6 months)
$15,000
Equipment, net
$600,000
Accounts payable
$140,000
Accrued wages
$25,000
Note payable to bank, due March 1, Year 3
$300,000
Serial bonds payable ($50,000 matures August 1, Year 3)