©THESTAR 2024/2025 ALL RIGHTS RESERVED 11:09PM. A+
CFI CBCA Core Course Exam Questions With
Correct Answers 100% Verified.
What is the main goal of using business writing fundamentals? - Answer✔To reduce mental
effort
Which of the following statements describes a "Capacity" strength or weakness for a company
in the 5 Cs of credit framework? - Answer✔The net profit margin ratio is high.
Which of the following statements describes a "Condition" strength or weakness for a company
in the 5 Cs of credit framework? - Answer✔The risks associated with the industry are high.
Which of the following scenarios would NOT be considered a strength when assessing the
management team as part of evaluating a company's character? - Answer✔Financial reports
are not widely shared and performance measures have not been identified.
Which of the following ratios most likely indicates strong "Capacity" for a company? -
Answer✔High asset turnover ratio
Select the correct formula to calculate the operating margin ratio. - Answer✔Operating Margin
Ratio = EBIT / Revenue
Select the correct formula to calculate the inventory turnover ratio. - Answer✔Inventory
Turnover Ratio = Cost of Goods Sold / Average Inventory
Which of the following most likely indicates strong "Capital" for a company? -
Answer✔Unutilized lines of credit or loans
Which of the following statements on collateral is NOT correct? - Answer✔Collateral can be
used as the main determinant of a credit decision.
Which of the following tools or methods is used to assess the general business environment? -
Answer✔PEST analysis
Select the loan contract with the lowest risk. - Answer✔A demand loan with monthly payments
secured by assets
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 11:09PM. A+
Which is not one of the three main financial statements? - Answer✔Statement of equity
What does the balance sheet indicate? - Answer✔The financial strength of the business
Financing activities - Answer✔Issuing shares and bonds
Operating activities - Answer✔Payments to suppliers; Depreciation and amortization expense
Investing activities - Answer✔Buying and selling equipment
Which is not a section in the financial statement note disclosures? - Answer✔Management
discussion and analysis
Balance Sheet - Answer✔Retained earnings; Share captial
Income Statement - Answer✔Rent expense
Cash Flow Statement - Answer✔Sale of property, plant and equipment
If a company has net assets equal to $3.25 million but is sold for $5.35 million, how much
goodwill does the acquirer record on their balance sheet? - Answer✔$2.1 million
Intangible assets - Answer✔Items of value, which have no physical substance, that are used to
generate revenues
Authorized shares - Answer✔The total number of shares a company can sell
Contingencies - Answer✔Events that may or may not happen, depending on certain
circumstances
Commitments - Answer✔Future obligations that a company has agreed to
If a company issues 60,000 shares at $0.25 each but the shares have a par value of $0.20 each,
what is the resulting contributed surplus? - Answer✔$3,000
What line item is not found in the statement of shareholders' equity? - Answer✔Debt issued or
repurchased
What is not true about a partnership? - Answer✔Partners cannot be held liable for a debt
Which line item usually accounts for direct labor? - Answer✔Cost of goods sold
Select the statements below which are true. Select all that apply. - Answer✔Depreciation and
amortization are non-cash expenses; A company can be profitable but experience negative cash
flows
What are the 4 types of audit opinions? - Answer✔Adverse, unqualified, qualified, and
disclaimer of opinion
2
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 11:09PM. A+
Which of the following statements regarding a review engagement is false? - Answer✔A review
engagement is used for financial statements prepared for internal use
Select the following key lending ratios used to evaluate the financial capacity of a business
(select all that apply). - Answer✔Debt to equity ratio; Working capital ratio
Which of the following tools is NOT used to analyze a company? - Answer✔Porter's five forces
Which of the following tools are used to analyze a company? - Answer✔Firm lifecycle, Ansoff's
matrix, SWOT analysis
In assessing the PESTEL factors, consumer disposable income is an example of: -
Answer✔Economic factors
Read the following passage and determine which of the PESTEL factors the described business
is facing:
Fresh and Co. is a local grocery store operating in a small town in Seattle since 2010. The store
sells fresh vegetables, fruits, meat, dairy, and other packaged products. In recent years, people
in the neighborhood have shown increasing demand for organic farm products. In response,
many other grocery stores and supermarkets have started selling organic vegetables and fruits
grown by local US farmers. - Answer✔Social factors
Read the following passage and determine which of the PESTEL factors the described business
is facing:
Mountain Transportation is a trucking company that provides in-door deliveries of electronic
products purchased through large consumer electronics retailers in the US. Shawn, a truck
driver at Mountain Transportation, has filed a lawsuit with the company regarding a violation of
the Hours of Service regulations for commercial drivers. Shawn claims that he has been forced
to work over 70 hours for the past couple weeks, due to a high volume of customer orders.
According to the Hours of Service regulations, all commercial drivers may not drive after 60
hours on duty in 7 consecutive days and may only restart after taking 34 or more consecutive
hours off duty.
(Source: https://www.fmcsa.dot.gov/regulations/hours-service/summary-hours-service-
regulations) - Answer✔Legal factors
When competition within an industry is high, which of the following is most likely to be true? -
Answer✔Buyers have high bargaining power
Which of the following is most likely true for companies at the maturity stage of the industry
lifecycle? - Answer✔Sales > Cash Flow > Profit
3
CFI CBCA Core Course Exam Questions With
Correct Answers 100% Verified.
What is the main goal of using business writing fundamentals? - Answer✔To reduce mental
effort
Which of the following statements describes a "Capacity" strength or weakness for a company
in the 5 Cs of credit framework? - Answer✔The net profit margin ratio is high.
Which of the following statements describes a "Condition" strength or weakness for a company
in the 5 Cs of credit framework? - Answer✔The risks associated with the industry are high.
Which of the following scenarios would NOT be considered a strength when assessing the
management team as part of evaluating a company's character? - Answer✔Financial reports
are not widely shared and performance measures have not been identified.
Which of the following ratios most likely indicates strong "Capacity" for a company? -
Answer✔High asset turnover ratio
Select the correct formula to calculate the operating margin ratio. - Answer✔Operating Margin
Ratio = EBIT / Revenue
Select the correct formula to calculate the inventory turnover ratio. - Answer✔Inventory
Turnover Ratio = Cost of Goods Sold / Average Inventory
Which of the following most likely indicates strong "Capital" for a company? -
Answer✔Unutilized lines of credit or loans
Which of the following statements on collateral is NOT correct? - Answer✔Collateral can be
used as the main determinant of a credit decision.
Which of the following tools or methods is used to assess the general business environment? -
Answer✔PEST analysis
Select the loan contract with the lowest risk. - Answer✔A demand loan with monthly payments
secured by assets
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 11:09PM. A+
Which is not one of the three main financial statements? - Answer✔Statement of equity
What does the balance sheet indicate? - Answer✔The financial strength of the business
Financing activities - Answer✔Issuing shares and bonds
Operating activities - Answer✔Payments to suppliers; Depreciation and amortization expense
Investing activities - Answer✔Buying and selling equipment
Which is not a section in the financial statement note disclosures? - Answer✔Management
discussion and analysis
Balance Sheet - Answer✔Retained earnings; Share captial
Income Statement - Answer✔Rent expense
Cash Flow Statement - Answer✔Sale of property, plant and equipment
If a company has net assets equal to $3.25 million but is sold for $5.35 million, how much
goodwill does the acquirer record on their balance sheet? - Answer✔$2.1 million
Intangible assets - Answer✔Items of value, which have no physical substance, that are used to
generate revenues
Authorized shares - Answer✔The total number of shares a company can sell
Contingencies - Answer✔Events that may or may not happen, depending on certain
circumstances
Commitments - Answer✔Future obligations that a company has agreed to
If a company issues 60,000 shares at $0.25 each but the shares have a par value of $0.20 each,
what is the resulting contributed surplus? - Answer✔$3,000
What line item is not found in the statement of shareholders' equity? - Answer✔Debt issued or
repurchased
What is not true about a partnership? - Answer✔Partners cannot be held liable for a debt
Which line item usually accounts for direct labor? - Answer✔Cost of goods sold
Select the statements below which are true. Select all that apply. - Answer✔Depreciation and
amortization are non-cash expenses; A company can be profitable but experience negative cash
flows
What are the 4 types of audit opinions? - Answer✔Adverse, unqualified, qualified, and
disclaimer of opinion
2
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 11:09PM. A+
Which of the following statements regarding a review engagement is false? - Answer✔A review
engagement is used for financial statements prepared for internal use
Select the following key lending ratios used to evaluate the financial capacity of a business
(select all that apply). - Answer✔Debt to equity ratio; Working capital ratio
Which of the following tools is NOT used to analyze a company? - Answer✔Porter's five forces
Which of the following tools are used to analyze a company? - Answer✔Firm lifecycle, Ansoff's
matrix, SWOT analysis
In assessing the PESTEL factors, consumer disposable income is an example of: -
Answer✔Economic factors
Read the following passage and determine which of the PESTEL factors the described business
is facing:
Fresh and Co. is a local grocery store operating in a small town in Seattle since 2010. The store
sells fresh vegetables, fruits, meat, dairy, and other packaged products. In recent years, people
in the neighborhood have shown increasing demand for organic farm products. In response,
many other grocery stores and supermarkets have started selling organic vegetables and fruits
grown by local US farmers. - Answer✔Social factors
Read the following passage and determine which of the PESTEL factors the described business
is facing:
Mountain Transportation is a trucking company that provides in-door deliveries of electronic
products purchased through large consumer electronics retailers in the US. Shawn, a truck
driver at Mountain Transportation, has filed a lawsuit with the company regarding a violation of
the Hours of Service regulations for commercial drivers. Shawn claims that he has been forced
to work over 70 hours for the past couple weeks, due to a high volume of customer orders.
According to the Hours of Service regulations, all commercial drivers may not drive after 60
hours on duty in 7 consecutive days and may only restart after taking 34 or more consecutive
hours off duty.
(Source: https://www.fmcsa.dot.gov/regulations/hours-service/summary-hours-service-
regulations) - Answer✔Legal factors
When competition within an industry is high, which of the following is most likely to be true? -
Answer✔Buyers have high bargaining power
Which of the following is most likely true for companies at the maturity stage of the industry
lifecycle? - Answer✔Sales > Cash Flow > Profit
3
