Sample CPA Exam Questions
1. A company pays $75,000 in cash to pay a current account payable. Would this transaction increase, decrease, or have no effect on the current ratio that now stands at 2:1?
(a) Increase
(b) Decrease
(c) No effect
2. A company purchases equipment by making a down payment and financing the remainder through a 4-year bank loan, due in monthly installments. What effect would this transaction have on the company’s current ratio, which currently stands at 1.5:1?
(a) Increase
(b) Decrease
(c) No effect
3. A firm borrows $200,000 from a bank. The principal and interest on the loan are due in 18 months. Would this transaction increase, decrease, or have no effect on the debt ratio (Total liabilities/Total assets) that now stands at 36%?
(a) Increase
(b) Decrease
(c) No effect