Cfi Fmva Exam Questions With Answers #3 2025
Income statement accounting - correct answer Accrual - revenues & costs recorded as
a business earns or incurs them, not as it receives and pays money
It includes them in the relevant period's income statement and matches them as closely
as possible
CF makes no difference whatsoever - IS where sale happens
=> How do you decide when sale happens? RECOGNIZE REV UPON DELIVERY OF
GOOD/SERVICE PERFORMED
Why are profits and cash flow not the same thing? - correct answer Accounting
differences
The idea of matching over time - correct answer
CFS Accounting - correct answer Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - correct answer record income and expenditures at the time
the money changes hands
Cash accounting method - correct answer An accounting method in which income and
expenditures are recorded at the time the money changes hands.
Accrual Accounting - correct answer recording in each fiscal period applicable
expenses, whether paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - correct answer reporting income when it is earned and
expenses when they are incurred
Accrual Basis Accounting - correct answer the method of accounting that recognizes
revenue when it is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - correct answer Accounting basis in which companies record,
in the periods in which the events occur, transactions that change a company's financial
statements, even if cash was not exchanged.
Accrued expenses - correct answer expenses incurred in one fiscal period but not paid
until a later fiscal period
Accrued expenses - correct answer expenses incurred but not yet paid in cash or
recorded
Cash flow from operating activities - correct answer The net amount of cash provided
from operating activities.
,Cash flow from financing activities - correct answer
The idea of matching over time - correct answer
CFS Accounting - correct answer Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - correct answer record income and expenditures at the time
the money changes hands
Cash accounting method - correct answer An accounting method in which income and
expenditures are recorded at the time the money changes hands.
Accrual Accounting - correct answer recording in each fiscal period applicable
expenses, whether paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - correct answer reporting income when it is earned and
expenses when they are incurred
Accrual Basis Accounting - correct answer the method of accounting that recognizes
revenue when it is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - correct answer Accounting basis in which companies record,
in the periods in which the events occur, transactions that change a company's financial
statements, even if cash was not exchanged.
Accrued expenses - correct answer expenses incurred in one fiscal period but not paid
until a later fiscal period
Accrued expenses - correct answer expenses incurred but not yet paid in cash or
recorded
Cash flow from operating activities - correct answer The net amount of cash provided
from operating activities.
Cash flow from financing activities - correct answer The section of the statement of cash
flows that reports cash flows from transactions affecting the equity and debt of the
business.
Cash flow from financing activities - correct answer items related to debt, dividends, and
issuing or repurchasing shares
,Cash flow from investing activities - correct answer The section of the statement of cash
flows that reports cash flows from transactions affecting investments in noncurrent
assets.
Cash flow from investing activities - correct answer involves any cash in or out of the
company due to investment in or disposal of fixed assets.
Contributed surplus - correct answer Amount paid for shares in excess of their par value
Contributed surplus - correct answer money that has been invested in the firm by
outside parties
Contributed surplus - correct answer A source of contributed capital that can result from
certain types of equity transactions, including the reacquisition of shares.
Straightline depreciation - correct answer Allocates equal amounts of plant assets net
cost to depreciation during its useful life.
Accounts Receivable - correct answer Amounts to be received in the future due to the
sale of goods or services
Accounts Payable - correct answer Amounts to be paid in the future for goods or
services already acquired
Cash Flow Accounting System - correct answer An accounting system entering
expenses and revenues only when cash is received or paid out.
Authorised share capital - correct answer Maximum number of shares that a company
can issue, as specified in the firm's memorandum of association
Outstanding share capital - correct answer Issued share capital less the par value of
shares that are held in the company's treasury.
Inventory - correct answer the quantity of goods that a firm has on hand
Inventory - correct answer a complete list of items such as property, goods in stock, or
the contents of a building.
Working Capital - correct answer current assets - current liabilities
Net Working Capital - correct answer current assets minus current liabilities
Current assets - correct answer cash and other assets expected to be exchanged for
cash or consumed within a year
, Current Liabilities - correct answer liabilities due within a short time, usually within a
year
Current assets include - correct answer cash, marketable securities, accounts
receivable, and inventories
Current liabilities include - correct answer notes payable, accounts payable, unearned
revenues, and accrued liabilities such as taxes, salaries and wages, and interest.
Current liabilities include - correct answer Accounts Payable
Short-Term Notes Payable
Wages Payable
Taxes Payable
Interest Payable
Contingencies - correct answer possible outcomes; different plans based on varying
circumstances
Unearned Revenue - correct answer A liability created when a business collects cash
from customers in advance of providing services or delivering goods.
Common Shares - correct answer Represent an ownership interest, a residual claim on
the firm's assets in liquidation, and govern through voting rights;
No obligation for firm to pay a dividend;
Can proxy their votes to others;
Preferred Shares - correct answer Shares of stock that entitle owner to a fixed dividend
amount. Dividend must be paid by the company before common stock owners get paid.
Shareholders usually do not have voting rights.
Preferred Shares - correct answer stock that gives its owners preference in the payment
of dividends and an earlier claim on assets than common shareholders if the company
is forced out of business and its assets are sold
Deferred income taxes - correct answer A liability account to pay income taxes that
have been postponed to a future year's income tax return. In some cases, this account
can also be an asset account representing income taxes to be saved in a future year's
income tax return.
Goodwill - correct answer amount paid for an existing business above the value of its
other assets
Goodwill - correct answer the value of all favourable attributes that relate to a company
that are not attributable to any other specific asset
Income statement accounting - correct answer Accrual - revenues & costs recorded as
a business earns or incurs them, not as it receives and pays money
It includes them in the relevant period's income statement and matches them as closely
as possible
CF makes no difference whatsoever - IS where sale happens
=> How do you decide when sale happens? RECOGNIZE REV UPON DELIVERY OF
GOOD/SERVICE PERFORMED
Why are profits and cash flow not the same thing? - correct answer Accounting
differences
The idea of matching over time - correct answer
CFS Accounting - correct answer Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - correct answer record income and expenditures at the time
the money changes hands
Cash accounting method - correct answer An accounting method in which income and
expenditures are recorded at the time the money changes hands.
Accrual Accounting - correct answer recording in each fiscal period applicable
expenses, whether paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - correct answer reporting income when it is earned and
expenses when they are incurred
Accrual Basis Accounting - correct answer the method of accounting that recognizes
revenue when it is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - correct answer Accounting basis in which companies record,
in the periods in which the events occur, transactions that change a company's financial
statements, even if cash was not exchanged.
Accrued expenses - correct answer expenses incurred in one fiscal period but not paid
until a later fiscal period
Accrued expenses - correct answer expenses incurred but not yet paid in cash or
recorded
Cash flow from operating activities - correct answer The net amount of cash provided
from operating activities.
,Cash flow from financing activities - correct answer
The idea of matching over time - correct answer
CFS Accounting - correct answer Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - correct answer record income and expenditures at the time
the money changes hands
Cash accounting method - correct answer An accounting method in which income and
expenditures are recorded at the time the money changes hands.
Accrual Accounting - correct answer recording in each fiscal period applicable
expenses, whether paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - correct answer reporting income when it is earned and
expenses when they are incurred
Accrual Basis Accounting - correct answer the method of accounting that recognizes
revenue when it is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - correct answer Accounting basis in which companies record,
in the periods in which the events occur, transactions that change a company's financial
statements, even if cash was not exchanged.
Accrued expenses - correct answer expenses incurred in one fiscal period but not paid
until a later fiscal period
Accrued expenses - correct answer expenses incurred but not yet paid in cash or
recorded
Cash flow from operating activities - correct answer The net amount of cash provided
from operating activities.
Cash flow from financing activities - correct answer The section of the statement of cash
flows that reports cash flows from transactions affecting the equity and debt of the
business.
Cash flow from financing activities - correct answer items related to debt, dividends, and
issuing or repurchasing shares
,Cash flow from investing activities - correct answer The section of the statement of cash
flows that reports cash flows from transactions affecting investments in noncurrent
assets.
Cash flow from investing activities - correct answer involves any cash in or out of the
company due to investment in or disposal of fixed assets.
Contributed surplus - correct answer Amount paid for shares in excess of their par value
Contributed surplus - correct answer money that has been invested in the firm by
outside parties
Contributed surplus - correct answer A source of contributed capital that can result from
certain types of equity transactions, including the reacquisition of shares.
Straightline depreciation - correct answer Allocates equal amounts of plant assets net
cost to depreciation during its useful life.
Accounts Receivable - correct answer Amounts to be received in the future due to the
sale of goods or services
Accounts Payable - correct answer Amounts to be paid in the future for goods or
services already acquired
Cash Flow Accounting System - correct answer An accounting system entering
expenses and revenues only when cash is received or paid out.
Authorised share capital - correct answer Maximum number of shares that a company
can issue, as specified in the firm's memorandum of association
Outstanding share capital - correct answer Issued share capital less the par value of
shares that are held in the company's treasury.
Inventory - correct answer the quantity of goods that a firm has on hand
Inventory - correct answer a complete list of items such as property, goods in stock, or
the contents of a building.
Working Capital - correct answer current assets - current liabilities
Net Working Capital - correct answer current assets minus current liabilities
Current assets - correct answer cash and other assets expected to be exchanged for
cash or consumed within a year
, Current Liabilities - correct answer liabilities due within a short time, usually within a
year
Current assets include - correct answer cash, marketable securities, accounts
receivable, and inventories
Current liabilities include - correct answer notes payable, accounts payable, unearned
revenues, and accrued liabilities such as taxes, salaries and wages, and interest.
Current liabilities include - correct answer Accounts Payable
Short-Term Notes Payable
Wages Payable
Taxes Payable
Interest Payable
Contingencies - correct answer possible outcomes; different plans based on varying
circumstances
Unearned Revenue - correct answer A liability created when a business collects cash
from customers in advance of providing services or delivering goods.
Common Shares - correct answer Represent an ownership interest, a residual claim on
the firm's assets in liquidation, and govern through voting rights;
No obligation for firm to pay a dividend;
Can proxy their votes to others;
Preferred Shares - correct answer Shares of stock that entitle owner to a fixed dividend
amount. Dividend must be paid by the company before common stock owners get paid.
Shareholders usually do not have voting rights.
Preferred Shares - correct answer stock that gives its owners preference in the payment
of dividends and an earlier claim on assets than common shareholders if the company
is forced out of business and its assets are sold
Deferred income taxes - correct answer A liability account to pay income taxes that
have been postponed to a future year's income tax return. In some cases, this account
can also be an asset account representing income taxes to be saved in a future year's
income tax return.
Goodwill - correct answer amount paid for an existing business above the value of its
other assets
Goodwill - correct answer the value of all favourable attributes that relate to a company
that are not attributable to any other specific asset
