AAAE ACE Airport Finance Mod 2: Questions And
Answers
Cash Basis Accounting Correct Ans - records revenues when cash is received and
expenses when cash is paid
Accrual Basis Accounting Correct Ans - reporting income when it is earned and
expenses when they are incurred, does not matter when cash is exchanged
Modified Accrual Accounting Correct Ans - recognized 1) revenues when the
resulting current financial resources are both measurable and available to be used and 2)
expenditures when they are incurred
GAAP Principles Correct Ans - Recognition, measurement, presentation, disclosure
Operating Budget Correct Ans - budget for day-to-day expenses covering the span
of a year
Capital Budget Correct Ans - budget for major capital, or investment, expenditures
covering up to 5-10 years, also subject to depreciation on accounting records
Budget Cycle Correct Ans - Planning, preparation, approval, execution (or
expenditure), analysis, audit
Incremental Budget Correct Ans - Increases the previous year's budget by a
percentage
Zero-Based Budget Correct Ans - allocates resources as if each budget was brand
new not taking into account last year's budget
Management by Objectives (MBO) Correct Ans - Setting goals and then creating a
budget to meet those goals
Activity-Based Budgeting (ABB) Correct Ans - Budgeting approach that focuses on
the budgeted cost of the activities necessary to accomplish functions.
1. Identify activities and their cost drivers
2. Forecast number of units of cost driver for required activity level
3. Calculate the cost driver (cost per unit of activity)
Statement of Net Position/Assets Correct Ans - Balance Sheet
Statement of Revenues, Expenses, and Changes in Net Position/Assets Correct Ans -
Income Statement
Answers
Cash Basis Accounting Correct Ans - records revenues when cash is received and
expenses when cash is paid
Accrual Basis Accounting Correct Ans - reporting income when it is earned and
expenses when they are incurred, does not matter when cash is exchanged
Modified Accrual Accounting Correct Ans - recognized 1) revenues when the
resulting current financial resources are both measurable and available to be used and 2)
expenditures when they are incurred
GAAP Principles Correct Ans - Recognition, measurement, presentation, disclosure
Operating Budget Correct Ans - budget for day-to-day expenses covering the span
of a year
Capital Budget Correct Ans - budget for major capital, or investment, expenditures
covering up to 5-10 years, also subject to depreciation on accounting records
Budget Cycle Correct Ans - Planning, preparation, approval, execution (or
expenditure), analysis, audit
Incremental Budget Correct Ans - Increases the previous year's budget by a
percentage
Zero-Based Budget Correct Ans - allocates resources as if each budget was brand
new not taking into account last year's budget
Management by Objectives (MBO) Correct Ans - Setting goals and then creating a
budget to meet those goals
Activity-Based Budgeting (ABB) Correct Ans - Budgeting approach that focuses on
the budgeted cost of the activities necessary to accomplish functions.
1. Identify activities and their cost drivers
2. Forecast number of units of cost driver for required activity level
3. Calculate the cost driver (cost per unit of activity)
Statement of Net Position/Assets Correct Ans - Balance Sheet
Statement of Revenues, Expenses, and Changes in Net Position/Assets Correct Ans -
Income Statement
