CFI CBCA CORE COURSE EXAM|LATEST 2025|QUESTIONS AND CORRECT VERIFIED
ANSWERS
What is the main goal of using business writing fundamentals? -CORRECT ANSWER-To
reduce mental effort
Which of the following statements describes a "Capacity" strength or weakness for a
company in the 5 Cs of credit framework? -CORRECT ANSWER-The net profit margin ratio is
high.
Which of the following statements describes a "Condition" strength or weakness for a
company in the 5 Cs of credit framework? -CORRECT ANSWER-The risks associated with the
industry are high.
Which of the following scenarios would NOT be considered a strength when assessing the
management team as part of evaluating a company's character? -CORRECT ANSWER-
Financial reports are not widely shared and performance measures have not been identified.
Which of the following ratios most likely indicates strong "Capacity" for a company? -
CORRECT ANSWER-High asset turnover ratio
Select the correct formula to calculate the operating margin ratio. -CORRECT ANSWER-
Operating Margin Ratio = EBIT / Revenue
Select the correct formula to calculate the inventory turnover ratio. -CORRECT ANSWER-
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
,Which of the following most likely indicates strong "Capital" for a company? -CORRECT
ANSWER-Unutilized lines of credit or loans
Which of the following statements on collateral is NOT correct? -CORRECT ANSWER-
Collateral can be used as the main determinant of a credit decision.
Which of the following tools or methods is used to assess the general business
environment? -CORRECT ANSWER-PEST analysis
Select the loan contract with the lowest risk. -CORRECT ANSWER-A demand loan with
monthly payments secured by assets
Which is not one of the three main financial statements? -CORRECT ANSWER-Statement of
equity
What does the balance sheet indicate? -CORRECT ANSWER-The financial strength of the
business
Financing activities -CORRECT ANSWER-Issuing shares and bonds
Operating activities -CORRECT ANSWER-Payments to suppliers; Depreciation and
amortization expense
Investing activities -CORRECT ANSWER-Buying and selling equipment
Which is not a section in the financial statement note disclosures? -CORRECT ANSWER-
Management discussion and analysis
Balance Sheet -CORRECT ANSWER-Retained earnings; Share captial
,Income Statement -CORRECT ANSWER-Rent expense
Cash Flow Statement -CORRECT ANSWER-Sale of property, plant and equipment
If a company has net assets equal to $3.25 million but is sold for $5.35 million, how much
goodwill does the acquirer record on their balance sheet? -CORRECT ANSWER-$2.1 million
Intangible assets -CORRECT ANSWER-Items of value, which have no physical substance, that
are used to generate revenues
Authorized shares -CORRECT ANSWER-The total number of shares a company can sell
Contingencies -CORRECT ANSWER-Events that may or may not happen, depending on
certain circumstances
Commitments -CORRECT ANSWER-Future obligations that a company has agreed to
If a company issues 60,000 shares at $0.25 each but the shares have a par value of $0.20
each, what is the resulting contributed surplus? -CORRECT ANSWER-$3,000
What line item is not found in the statement of shareholders' equity? -CORRECT ANSWER-
Debt issued or repurchased
What is not true about a partnership? -CORRECT ANSWER-Partners cannot be held liable for
a debt
Which line item usually accounts for direct labor? -CORRECT ANSWER-Cost of goods sold
, Select the statements below which are true. Select all that apply. -CORRECT ANSWER-
Depreciation and amortization are non-cash expenses; A company can be profitable but
experience negative cash flows
What are the 4 types of audit opinions? -CORRECT ANSWER-Adverse, unqualified, qualified,
and disclaimer of opinion
Which of the following statements regarding a review engagement is false? -CORRECT
ANSWER-A review engagement is used for financial statements prepared for internal use
Select the following key lending ratios used to evaluate the financial capacity of a business
(select all that apply). -CORRECT ANSWER-Debt to equity ratio; Working capital ratio
Which of the following tools is NOT used to analyze a company? -CORRECT ANSWER-Porter's
five forces
Which of the following tools are used to analyze a company? -CORRECT ANSWER-Firm
lifecycle, Ansoff's matrix, SWOT analysis
In assessing the PESTEL factors, consumer disposable income is an example of: -CORRECT
ANSWER-Economic factors
Read the following passage and determine which of the PESTEL factors the described
business is facing:
Fresh and Co. is a local grocery store operating in a small town in Seattle since 2010. The
store sells fresh vegetables, fruits, meat, dairy, and other packaged products. In recent years,
people in the neighborhood have shown increasing demand for organic farm products. In
response, many other grocery stores and supermarkets have started selling organic
vegetables and fruits grown by local US farmers. -CORRECT ANSWER-Social factors
Read the following passage and determine which of the PESTEL factors the described
business is facing:
ANSWERS
What is the main goal of using business writing fundamentals? -CORRECT ANSWER-To
reduce mental effort
Which of the following statements describes a "Capacity" strength or weakness for a
company in the 5 Cs of credit framework? -CORRECT ANSWER-The net profit margin ratio is
high.
Which of the following statements describes a "Condition" strength or weakness for a
company in the 5 Cs of credit framework? -CORRECT ANSWER-The risks associated with the
industry are high.
Which of the following scenarios would NOT be considered a strength when assessing the
management team as part of evaluating a company's character? -CORRECT ANSWER-
Financial reports are not widely shared and performance measures have not been identified.
Which of the following ratios most likely indicates strong "Capacity" for a company? -
CORRECT ANSWER-High asset turnover ratio
Select the correct formula to calculate the operating margin ratio. -CORRECT ANSWER-
Operating Margin Ratio = EBIT / Revenue
Select the correct formula to calculate the inventory turnover ratio. -CORRECT ANSWER-
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
,Which of the following most likely indicates strong "Capital" for a company? -CORRECT
ANSWER-Unutilized lines of credit or loans
Which of the following statements on collateral is NOT correct? -CORRECT ANSWER-
Collateral can be used as the main determinant of a credit decision.
Which of the following tools or methods is used to assess the general business
environment? -CORRECT ANSWER-PEST analysis
Select the loan contract with the lowest risk. -CORRECT ANSWER-A demand loan with
monthly payments secured by assets
Which is not one of the three main financial statements? -CORRECT ANSWER-Statement of
equity
What does the balance sheet indicate? -CORRECT ANSWER-The financial strength of the
business
Financing activities -CORRECT ANSWER-Issuing shares and bonds
Operating activities -CORRECT ANSWER-Payments to suppliers; Depreciation and
amortization expense
Investing activities -CORRECT ANSWER-Buying and selling equipment
Which is not a section in the financial statement note disclosures? -CORRECT ANSWER-
Management discussion and analysis
Balance Sheet -CORRECT ANSWER-Retained earnings; Share captial
,Income Statement -CORRECT ANSWER-Rent expense
Cash Flow Statement -CORRECT ANSWER-Sale of property, plant and equipment
If a company has net assets equal to $3.25 million but is sold for $5.35 million, how much
goodwill does the acquirer record on their balance sheet? -CORRECT ANSWER-$2.1 million
Intangible assets -CORRECT ANSWER-Items of value, which have no physical substance, that
are used to generate revenues
Authorized shares -CORRECT ANSWER-The total number of shares a company can sell
Contingencies -CORRECT ANSWER-Events that may or may not happen, depending on
certain circumstances
Commitments -CORRECT ANSWER-Future obligations that a company has agreed to
If a company issues 60,000 shares at $0.25 each but the shares have a par value of $0.20
each, what is the resulting contributed surplus? -CORRECT ANSWER-$3,000
What line item is not found in the statement of shareholders' equity? -CORRECT ANSWER-
Debt issued or repurchased
What is not true about a partnership? -CORRECT ANSWER-Partners cannot be held liable for
a debt
Which line item usually accounts for direct labor? -CORRECT ANSWER-Cost of goods sold
, Select the statements below which are true. Select all that apply. -CORRECT ANSWER-
Depreciation and amortization are non-cash expenses; A company can be profitable but
experience negative cash flows
What are the 4 types of audit opinions? -CORRECT ANSWER-Adverse, unqualified, qualified,
and disclaimer of opinion
Which of the following statements regarding a review engagement is false? -CORRECT
ANSWER-A review engagement is used for financial statements prepared for internal use
Select the following key lending ratios used to evaluate the financial capacity of a business
(select all that apply). -CORRECT ANSWER-Debt to equity ratio; Working capital ratio
Which of the following tools is NOT used to analyze a company? -CORRECT ANSWER-Porter's
five forces
Which of the following tools are used to analyze a company? -CORRECT ANSWER-Firm
lifecycle, Ansoff's matrix, SWOT analysis
In assessing the PESTEL factors, consumer disposable income is an example of: -CORRECT
ANSWER-Economic factors
Read the following passage and determine which of the PESTEL factors the described
business is facing:
Fresh and Co. is a local grocery store operating in a small town in Seattle since 2010. The
store sells fresh vegetables, fruits, meat, dairy, and other packaged products. In recent years,
people in the neighborhood have shown increasing demand for organic farm products. In
response, many other grocery stores and supermarkets have started selling organic
vegetables and fruits grown by local US farmers. -CORRECT ANSWER-Social factors
Read the following passage and determine which of the PESTEL factors the described
business is facing:
