Page 1 of 182
CFI FMVA FINAL STUDY GUIDE (FINANCIAL
MODELING & VALUATION ANALYST FINAL
EXAM PREP) *** QUESTIONS AND ANSWERS |
VERIFIED AND WELL DETAILED ANSWERS |
DOWNLOAD AND PASS | LATEST EXAM
UPDATE 2026/2027
Income statement accounting
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?
,Page 2 of 182
Accounting differences
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
,Page 3 of 182
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
, Page 4 of 182
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
CFI FMVA FINAL STUDY GUIDE (FINANCIAL
MODELING & VALUATION ANALYST FINAL
EXAM PREP) *** QUESTIONS AND ANSWERS |
VERIFIED AND WELL DETAILED ANSWERS |
DOWNLOAD AND PASS | LATEST EXAM
UPDATE 2026/2027
Income statement accounting
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?
,Page 2 of 182
Accounting differences
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
,Page 3 of 182
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
, Page 4 of 182
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
