CFI FMVA EXAM WITH VERIFIED ANSWERS
Income statement accounting - verified answersAccrual - 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? - verified answersAccounting differences
The idea of matching over time - verified answers
CFS Accounting - verified answersOnly records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - verified answersrecord income and expenditures at the time the money
changes hands
Cash accounting method - verified answersAn accounting method in which income and expenditures
are recorded at the time the money changes hands.
Accrual Accounting - verified answersrecording in each fiscal period applicable expenses, whether
paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - verified answersreporting income when it is earned and expenses when
they are incurred
Accrual Basis Accounting - verified answersthe method of accounting that recognizes revenue when it
is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - verified answersAccounting 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 - verified answersexpenses incurred in one fiscal period but not paid until a later
fiscal period
accrued expenses - verified answersexpenses incurred but not yet paid in cash or recorded
,CFI FMVA EXAM WITH VERIFIED ANSWERS
Cash flow from operating activities - verified answersThe net amount of cash provided from
operating activities.
cash flow from financing activities - verified answers
The idea of matching over time - verified answers
CFS Accounting - verified answersOnly records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - verified answersrecord income and expenditures at the time the money
changes hands
Cash accounting method - verified answersAn accounting method in which income and expenditures
are recorded at the time the money changes hands.
Accrual Accounting - verified answersrecording in each fiscal period applicable expenses, whether
paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - verified answersreporting income when it is earned and expenses when
they are incurred
Accrual Basis Accounting - verified answersthe method of accounting that recognizes revenue when it
is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - verified answersAccounting 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 - verified answersexpenses incurred in one fiscal period but not paid until a later
fiscal period
accrued expenses - verified answersexpenses incurred but not yet paid in cash or recorded
Cash flow from operating activities - verified answersThe net amount of cash provided from
operating activities.
cash flow from financing activities - verified answersThe 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 - verified answersitems related to debt, dividends, and issuing or
repurchasing shares
cash flow from investing activities - verified answersThe section of the statement of cash flows that
reports cash flows from transactions affecting investments in noncurrent assets.
cash flow from investing activities - verified answersinvolves any cash in or out of the company due
to investment in or disposal of fixed assets.
Contributed surplus - verified answersAmount paid for shares in excess of their par value
,CFI FMVA EXAM WITH VERIFIED ANSWERS
Contributed surplus - verified answersmoney that has been invested in the firm by outside parties
Contributed surplus - verified answersA source of contributed capital that can result from certain
types of equity transactions, including the reacquisition of shares.
Straightline depreciation - verified answersAllocates equal amounts of plant assets net cost to
depreciation during its useful life.
Accounts Receivable - verified answersAmounts to be received in the future due to the sale of goods
or services
Accounts Payable - verified answersAmounts to be paid in the future for goods or services already
acquired
Cash Flow Accounting System - verified answersAn accounting system entering expenses and
revenues only when cash is received or paid out.
authorised share capital - verified answersMaximum number of shares that a company can issue, as
specified in the firm's memorandum of association
outstanding share capital - verified answersIssued share capital less the par value of shares that are
held in the company's treasury.
inventory - verified answersthe quantity of goods that a firm has on hand
inventory - verified answersa complete list of items such as property, goods in stock, or the contents
of a building.
Working Capital - verified answerscurrent assets - current liabilities
Net Working Capital - verified answerscurrent assets minus current liabilities
current assets - verified answerscash and other assets expected to be exchanged for cash or
consumed within a year
Current Liabilities - verified answersliabilities due within a short time, usually within a year
Current assets include - verified answerscash, marketable securities, accounts receivable, and
inventories
Current liabilities include - verified answersnotes payable, accounts payable, unearned revenues, and
accrued liabilities such as taxes, salaries and wages, and interest.
Current liabilities include - verified answersAccounts Payable
Short-Term Notes Payable
Wages Payable
Taxes Payable
Interest Payable
Contingencies - verified answerspossible outcomes; different plans based on varying circumstances
, CFI FMVA EXAM WITH VERIFIED ANSWERS
Unearned Revenue - verified answersA liability created when a business collects cash from customers
in advance of providing services or delivering goods.
Common Shares - verified answersRepresent 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 - verified answersShares 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 - verified answersstock 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 - verified answersA 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 - verified answersamount paid for an existing business above the value of its other assets
goodwill - verified answersthe value of all favourable attributes that relate to a company that are not
attributable to any other specific asset
Goodwill (accounting) - verified answersprice paid in excess of the fair market value of assets
acquired
intangible assets - verified answersassets that do not have physical substance
intangible assets - verified answerslong-term assets (e.g., patents, trademarks, copyrights) that have
no real physical form but do have value
intangible assets - verified answersRights, privileges, and competitive advantages that result from the
ownership of long-lived assets that do not possess physical substance.
Tangible assets include - verified answersland, land improvements, buildings, equipment, and natural
resources
Intangible assets include - verified answerspatents, trademarks, copyrights, franchises, and goodwill
Intangible assets include - verified answersgoodwill, patents, copyrights, and trademarks or trade
names
Other Comprehensive Income (OCI) - verified answerscertain gains and losses that are excluded from
the calculation of net income, but included in the calculation of comprehensive income
Other Comprehensive Income (OCI) - verified answerschanges in stockholders' equity other than
transactions with owners and other than items that affect net income
Income statement accounting - verified answersAccrual - 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? - verified answersAccounting differences
The idea of matching over time - verified answers
CFS Accounting - verified answersOnly records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - verified answersrecord income and expenditures at the time the money
changes hands
Cash accounting method - verified answersAn accounting method in which income and expenditures
are recorded at the time the money changes hands.
Accrual Accounting - verified answersrecording in each fiscal period applicable expenses, whether
paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - verified answersreporting income when it is earned and expenses when
they are incurred
Accrual Basis Accounting - verified answersthe method of accounting that recognizes revenue when it
is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - verified answersAccounting 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 - verified answersexpenses incurred in one fiscal period but not paid until a later
fiscal period
accrued expenses - verified answersexpenses incurred but not yet paid in cash or recorded
,CFI FMVA EXAM WITH VERIFIED ANSWERS
Cash flow from operating activities - verified answersThe net amount of cash provided from
operating activities.
cash flow from financing activities - verified answers
The idea of matching over time - verified answers
CFS Accounting - verified answersOnly records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
Cash accounting method - verified answersrecord income and expenditures at the time the money
changes hands
Cash accounting method - verified answersAn accounting method in which income and expenditures
are recorded at the time the money changes hands.
Accrual Accounting - verified answersrecording in each fiscal period applicable expenses, whether
paid or not, and income earned, whether collected or not.
Accrual Basis Accounting - verified answersreporting income when it is earned and expenses when
they are incurred
Accrual Basis Accounting - verified answersthe method of accounting that recognizes revenue when it
is earned and matches expenses to the revenues they helped produce
Accrual Basis Accounting - verified answersAccounting 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 - verified answersexpenses incurred in one fiscal period but not paid until a later
fiscal period
accrued expenses - verified answersexpenses incurred but not yet paid in cash or recorded
Cash flow from operating activities - verified answersThe net amount of cash provided from
operating activities.
cash flow from financing activities - verified answersThe 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 - verified answersitems related to debt, dividends, and issuing or
repurchasing shares
cash flow from investing activities - verified answersThe section of the statement of cash flows that
reports cash flows from transactions affecting investments in noncurrent assets.
cash flow from investing activities - verified answersinvolves any cash in or out of the company due
to investment in or disposal of fixed assets.
Contributed surplus - verified answersAmount paid for shares in excess of their par value
,CFI FMVA EXAM WITH VERIFIED ANSWERS
Contributed surplus - verified answersmoney that has been invested in the firm by outside parties
Contributed surplus - verified answersA source of contributed capital that can result from certain
types of equity transactions, including the reacquisition of shares.
Straightline depreciation - verified answersAllocates equal amounts of plant assets net cost to
depreciation during its useful life.
Accounts Receivable - verified answersAmounts to be received in the future due to the sale of goods
or services
Accounts Payable - verified answersAmounts to be paid in the future for goods or services already
acquired
Cash Flow Accounting System - verified answersAn accounting system entering expenses and
revenues only when cash is received or paid out.
authorised share capital - verified answersMaximum number of shares that a company can issue, as
specified in the firm's memorandum of association
outstanding share capital - verified answersIssued share capital less the par value of shares that are
held in the company's treasury.
inventory - verified answersthe quantity of goods that a firm has on hand
inventory - verified answersa complete list of items such as property, goods in stock, or the contents
of a building.
Working Capital - verified answerscurrent assets - current liabilities
Net Working Capital - verified answerscurrent assets minus current liabilities
current assets - verified answerscash and other assets expected to be exchanged for cash or
consumed within a year
Current Liabilities - verified answersliabilities due within a short time, usually within a year
Current assets include - verified answerscash, marketable securities, accounts receivable, and
inventories
Current liabilities include - verified answersnotes payable, accounts payable, unearned revenues, and
accrued liabilities such as taxes, salaries and wages, and interest.
Current liabilities include - verified answersAccounts Payable
Short-Term Notes Payable
Wages Payable
Taxes Payable
Interest Payable
Contingencies - verified answerspossible outcomes; different plans based on varying circumstances
, CFI FMVA EXAM WITH VERIFIED ANSWERS
Unearned Revenue - verified answersA liability created when a business collects cash from customers
in advance of providing services or delivering goods.
Common Shares - verified answersRepresent 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 - verified answersShares 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 - verified answersstock 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 - verified answersA 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 - verified answersamount paid for an existing business above the value of its other assets
goodwill - verified answersthe value of all favourable attributes that relate to a company that are not
attributable to any other specific asset
Goodwill (accounting) - verified answersprice paid in excess of the fair market value of assets
acquired
intangible assets - verified answersassets that do not have physical substance
intangible assets - verified answerslong-term assets (e.g., patents, trademarks, copyrights) that have
no real physical form but do have value
intangible assets - verified answersRights, privileges, and competitive advantages that result from the
ownership of long-lived assets that do not possess physical substance.
Tangible assets include - verified answersland, land improvements, buildings, equipment, and natural
resources
Intangible assets include - verified answerspatents, trademarks, copyrights, franchises, and goodwill
Intangible assets include - verified answersgoodwill, patents, copyrights, and trademarks or trade
names
Other Comprehensive Income (OCI) - verified answerscertain gains and losses that are excluded from
the calculation of net income, but included in the calculation of comprehensive income
Other Comprehensive Income (OCI) - verified answerschanges in stockholders' equity other than
transactions with owners and other than items that affect net income
