CFI FMVA EXAM 2 2026 STUDY GUIDE
COMPLETE FINANCIAL MODELING AND
VALUATION CONCEPTS AND PRACTICE
QUESTIONS
◉ Why are profits and cash flow not the same thing. Answer:
Accounting differences
◉ The idea of matching over time. Answer:
◉ CFS Accounting. Answer: Only records transactions when cash is
received
VS
IS records ALL revenues earned, whether in cash or accrued
◉ Cash accounting method. Answer: record income and
expenditures at the time the money changes hands
◉ Cash accounting method. Answer: An accounting method in which
income and expenditures are recorded at the time the money
changes hands.
,◉ Accrual Accounting. Answer: recording in each fiscal period
applicable expenses, whether paid or not, and income earned,
whether collected or not.
◉ Accrual Basis Accounting. Answer: reporting income when it is
earned and expenses when they are incurred
◉ Accrual Basis Accounting. Answer: the method of accounting that
recognizes revenue when it is earned and matches expenses to the
revenues they helped produce
◉ Accrual Basis Accounting. 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. Answer: expenses incurred in one fiscal period
but not paid until a later fiscal period
◉ accrued expenses. Answer: expenses incurred but not yet paid in
cash or recorded
◉ Cash flow from operating activities. Answer: The net amount of
cash provided from operating activities.
,◉ cash flow from financing activities. Answer:
◉ The idea of matching over time. Answer:
◉ CFS Accounting. Answer: Only records transactions when cash is
received
VS
IS records ALL revenues earned, whether in cash or accrued
◉ Cash accounting method. Answer: record income and
expenditures at the time the money changes hands
◉ Cash accounting method. Answer: An accounting method in which
income and expenditures are recorded at the time the money
changes hands.
◉ Accrual Accounting. Answer: recording in each fiscal period
applicable expenses, whether paid or not, and income earned,
whether collected or not.
◉ Accrual Basis Accounting. Answer: reporting income when it is
earned and expenses when they are incurred
, ◉ Accrual Basis Accounting. Answer: the method of accounting that
recognizes revenue when it is earned and matches expenses to the
revenues they helped produce
◉ Accrual Basis Accounting. 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. Answer: expenses incurred in one fiscal period
but not paid until a later fiscal period
◉ accrued expenses. Answer: expenses incurred but not yet paid in
cash or recorded
◉ Cash flow from operating activities. Answer: The net amount of
cash provided from operating activities.
◉ cash flow from financing activities. 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. Answer: items related to debt,
dividends, and issuing or repurchasing shares
COMPLETE FINANCIAL MODELING AND
VALUATION CONCEPTS AND PRACTICE
QUESTIONS
◉ Why are profits and cash flow not the same thing. Answer:
Accounting differences
◉ The idea of matching over time. Answer:
◉ CFS Accounting. Answer: Only records transactions when cash is
received
VS
IS records ALL revenues earned, whether in cash or accrued
◉ Cash accounting method. Answer: record income and
expenditures at the time the money changes hands
◉ Cash accounting method. Answer: An accounting method in which
income and expenditures are recorded at the time the money
changes hands.
,◉ Accrual Accounting. Answer: recording in each fiscal period
applicable expenses, whether paid or not, and income earned,
whether collected or not.
◉ Accrual Basis Accounting. Answer: reporting income when it is
earned and expenses when they are incurred
◉ Accrual Basis Accounting. Answer: the method of accounting that
recognizes revenue when it is earned and matches expenses to the
revenues they helped produce
◉ Accrual Basis Accounting. 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. Answer: expenses incurred in one fiscal period
but not paid until a later fiscal period
◉ accrued expenses. Answer: expenses incurred but not yet paid in
cash or recorded
◉ Cash flow from operating activities. Answer: The net amount of
cash provided from operating activities.
,◉ cash flow from financing activities. Answer:
◉ The idea of matching over time. Answer:
◉ CFS Accounting. Answer: Only records transactions when cash is
received
VS
IS records ALL revenues earned, whether in cash or accrued
◉ Cash accounting method. Answer: record income and
expenditures at the time the money changes hands
◉ Cash accounting method. Answer: An accounting method in which
income and expenditures are recorded at the time the money
changes hands.
◉ Accrual Accounting. Answer: recording in each fiscal period
applicable expenses, whether paid or not, and income earned,
whether collected or not.
◉ Accrual Basis Accounting. Answer: reporting income when it is
earned and expenses when they are incurred
, ◉ Accrual Basis Accounting. Answer: the method of accounting that
recognizes revenue when it is earned and matches expenses to the
revenues they helped produce
◉ Accrual Basis Accounting. 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. Answer: expenses incurred in one fiscal period
but not paid until a later fiscal period
◉ accrued expenses. Answer: expenses incurred but not yet paid in
cash or recorded
◉ Cash flow from operating activities. Answer: The net amount of
cash provided from operating activities.
◉ cash flow from financing activities. 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. Answer: items related to debt,
dividends, and issuing or repurchasing shares
