CFI FMVA Final Exam Questions and
Answers (2026/2027) | Updated
Review | A+ Verified
• Why are profits and cash flow not the same thing? -✓✓Accounting differences
• CFS Accounting -✓✓Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
• Cash accounting method -✓✓record income and expenditures at the time the money
changes hands
• Cash accounting method -✓✓An accounting method in which income and
expenditures are recorded at the time the money changes hands.
• Accrual Accounting -✓✓recording in each fiscal period applicable expenses, whether
paid or not, and income earned, whether collected or not.
• Accrual Basis Accounting -✓✓reporting income when it is earned and expenses when
they are incurred
• Accrual Basis Accounting -✓✓the method of accounting that recognizes revenue
when it is earned and matches expenses to the revenues they helped produce
• Accrual Basis Accounting -✓✓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 -✓✓expenses incurred in one fiscal period but not paid until a later
fiscal period
• accrued expenses -✓✓expenses incurred but not yet paid in cash or recorded
• Cash flow from operating activities -✓✓The net amount of cash provided from
operating activities.
• cash flow from financing activities -✓✓
• The idea of matching over time -✓✓
,• CFS Accounting -✓✓Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
• Cash accounting method -✓✓record income and expenditures at the time the money
changes hands
• Cash accounting method -✓✓An accounting method in which income and
expenditures are recorded at the time the money changes hands.
• Accrual Accounting -✓✓recording in each fiscal period applicable expenses, whether
paid or not, and income earned, whether collected or not.
• Accrual Basis Accounting -✓✓reporting income when it is earned and expenses when
they are incurred
• Accrual Basis Accounting -✓✓the method of accounting that recognizes revenue
when it is earned and matches expenses to the revenues they helped produce
• Accrual Basis Accounting -✓✓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 -✓✓expenses incurred in one fiscal period but not paid until a later
fiscal period
• accrued expenses -✓✓expenses incurred but not yet paid in cash or recorded
• Cash flow from operating activities -✓✓The net amount of cash provided from
operating activities.
• cash flow from financing activities -✓✓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 -✓✓items related to debt, dividends, and issuing or
repurchasing shares
• cash flow from investing activities -✓✓The section of the statement of cash flows that
reports cash flows from transactions affecting investments in noncurrent assets.
• cash flow from investing activities -✓✓involves any cash in or out of the company due
to investment in or disposal of fixed assets.
,• Contributed surplus -✓✓Amount paid for shares in excess of their par value
• Contributed surplus -✓✓money that has been invested in the firm by outside parties
• Contributed surplus -✓✓A source of contributed capital that can result from certain
types of equity transactions, including the reacquisition of shares.
• Straightline depreciation -✓✓Allocates equal amounts of plant assets net cost to
depreciation during its useful life.
• Accounts Receivable -✓✓Amounts to be received in the future due to the sale of
goods or services
• Accounts Payable -✓✓Amounts to be paid in the future for goods or services already
acquired
• Cash Flow Accounting System -✓✓An accounting system entering expenses and
revenues only when cash is received or paid out.
• authorised share capital -✓✓Maximum number of shares that a company can issue,
as specified in the firm's memorandum of association
• outstanding share capital -✓✓Issued share capital less the par value of shares that
are held in the company's treasury.
• inventory -✓✓the quantity of goods that a firm has on hand
• inventory -✓✓a complete list of items such as property, goods in stock, or the
contents of a building.
• Working Capital -✓✓current assets - current liabilities
• Net Working Capital -✓✓current assets minus current liabilities
• current assets -✓✓cash and other assets expected to be exchanged for cash or
consumed within a year
• Current Liabilities -✓✓liabilities due within a short time, usually within a year
• Current assets include -✓✓cash, marketable securities, accounts receivable, and
inventories
• Current liabilities include -✓✓notes payable, accounts payable, unearned revenues,
and accrued liabilities such as taxes, salaries and wages, and interest.
, • Current liabilities include -✓✓Accounts Payable
Short-Term Notes Payable
Wages Payable
Taxes Payable
Interest Payable
• Contingencies -✓✓possible outcomes; different plans based on varying
circumstances
• Unearned Revenue -✓✓A liability created when a business collects cash from
customers in advance of providing services or delivering goods.
• Common Shares -✓✓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 -✓✓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 -✓✓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 -✓✓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 -✓✓amount paid for an existing business above the value of its other assets
• goodwill -✓✓the value of all favourable attributes that relate to a company that are not
attributable to any other specific asset
• Goodwill (accounting) -✓✓price paid in excess of the fair market value of assets
acquired
• intangible assets -✓✓assets that do not have physical substance
• intangible assets -✓✓long-term assets (e.g., patents, trademarks, copyrights) that
have no real physical form but do have value
Answers (2026/2027) | Updated
Review | A+ Verified
• Why are profits and cash flow not the same thing? -✓✓Accounting differences
• CFS Accounting -✓✓Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
• Cash accounting method -✓✓record income and expenditures at the time the money
changes hands
• Cash accounting method -✓✓An accounting method in which income and
expenditures are recorded at the time the money changes hands.
• Accrual Accounting -✓✓recording in each fiscal period applicable expenses, whether
paid or not, and income earned, whether collected or not.
• Accrual Basis Accounting -✓✓reporting income when it is earned and expenses when
they are incurred
• Accrual Basis Accounting -✓✓the method of accounting that recognizes revenue
when it is earned and matches expenses to the revenues they helped produce
• Accrual Basis Accounting -✓✓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 -✓✓expenses incurred in one fiscal period but not paid until a later
fiscal period
• accrued expenses -✓✓expenses incurred but not yet paid in cash or recorded
• Cash flow from operating activities -✓✓The net amount of cash provided from
operating activities.
• cash flow from financing activities -✓✓
• The idea of matching over time -✓✓
,• CFS Accounting -✓✓Only records transactions when cash is received
VS
IS records ALL revenues earned, whether in cash or accrued
• Cash accounting method -✓✓record income and expenditures at the time the money
changes hands
• Cash accounting method -✓✓An accounting method in which income and
expenditures are recorded at the time the money changes hands.
• Accrual Accounting -✓✓recording in each fiscal period applicable expenses, whether
paid or not, and income earned, whether collected or not.
• Accrual Basis Accounting -✓✓reporting income when it is earned and expenses when
they are incurred
• Accrual Basis Accounting -✓✓the method of accounting that recognizes revenue
when it is earned and matches expenses to the revenues they helped produce
• Accrual Basis Accounting -✓✓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 -✓✓expenses incurred in one fiscal period but not paid until a later
fiscal period
• accrued expenses -✓✓expenses incurred but not yet paid in cash or recorded
• Cash flow from operating activities -✓✓The net amount of cash provided from
operating activities.
• cash flow from financing activities -✓✓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 -✓✓items related to debt, dividends, and issuing or
repurchasing shares
• cash flow from investing activities -✓✓The section of the statement of cash flows that
reports cash flows from transactions affecting investments in noncurrent assets.
• cash flow from investing activities -✓✓involves any cash in or out of the company due
to investment in or disposal of fixed assets.
,• Contributed surplus -✓✓Amount paid for shares in excess of their par value
• Contributed surplus -✓✓money that has been invested in the firm by outside parties
• Contributed surplus -✓✓A source of contributed capital that can result from certain
types of equity transactions, including the reacquisition of shares.
• Straightline depreciation -✓✓Allocates equal amounts of plant assets net cost to
depreciation during its useful life.
• Accounts Receivable -✓✓Amounts to be received in the future due to the sale of
goods or services
• Accounts Payable -✓✓Amounts to be paid in the future for goods or services already
acquired
• Cash Flow Accounting System -✓✓An accounting system entering expenses and
revenues only when cash is received or paid out.
• authorised share capital -✓✓Maximum number of shares that a company can issue,
as specified in the firm's memorandum of association
• outstanding share capital -✓✓Issued share capital less the par value of shares that
are held in the company's treasury.
• inventory -✓✓the quantity of goods that a firm has on hand
• inventory -✓✓a complete list of items such as property, goods in stock, or the
contents of a building.
• Working Capital -✓✓current assets - current liabilities
• Net Working Capital -✓✓current assets minus current liabilities
• current assets -✓✓cash and other assets expected to be exchanged for cash or
consumed within a year
• Current Liabilities -✓✓liabilities due within a short time, usually within a year
• Current assets include -✓✓cash, marketable securities, accounts receivable, and
inventories
• Current liabilities include -✓✓notes payable, accounts payable, unearned revenues,
and accrued liabilities such as taxes, salaries and wages, and interest.
, • Current liabilities include -✓✓Accounts Payable
Short-Term Notes Payable
Wages Payable
Taxes Payable
Interest Payable
• Contingencies -✓✓possible outcomes; different plans based on varying
circumstances
• Unearned Revenue -✓✓A liability created when a business collects cash from
customers in advance of providing services or delivering goods.
• Common Shares -✓✓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 -✓✓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 -✓✓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 -✓✓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 -✓✓amount paid for an existing business above the value of its other assets
• goodwill -✓✓the value of all favourable attributes that relate to a company that are not
attributable to any other specific asset
• Goodwill (accounting) -✓✓price paid in excess of the fair market value of assets
acquired
• intangible assets -✓✓assets that do not have physical substance
• intangible assets -✓✓long-term assets (e.g., patents, trademarks, copyrights) that
have no real physical form but do have value
