CFI FMVA Questions with Correct Answers
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.
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.
