NAB Finance Exam Questions and
Correct Answers
What is working capital - Answer-the excess of current assets over current liability. The
goal to decrease liabilities and increase assets
The matching principle dictates what? - Answer-the principle of depreciation
Acid-Test Ratio - Answer-the measure of a firm's ability to pay it's current liabilities a
short period of time (immediately). The higher the ratio the better the company will be
able to pay its bills on time.
Quick Assets/Current Liabilities = Acid-test ratio
return on equity - Answer-Means of assessing a company's profitability
current ratio - Answer-the measure of a firms ability to pay current debts
> 1 able to pay bills
< 1 unable to pay bills
Assets/Liabilities = current ratio
Non current assets are? - Answer-Property/Plant/Equipment: fixed assets, capital
assets or plant assets)
What is aging of accounts receivable? - Answer-summarizes unpaid balances in terms
of age groups.
Office of Inspector General? - Answer-Department charged with Id'ing fraud, abuse and
wasteful spending
What is the primary purpose/value of financial management? - Answer-it provides
accounting information that the administrator can use to make decisions and manage
the facility.
1. Control standards
2. measures performance
Accounting - Answer-the process that includes bookkeeping,(budgeting, financial
reports, auditing and accounting systems)
, Assets - Answer-things of value (things owned, cash, equipment, real estate *accounts
receivable*) expressed in money terms
current asset - Answer-*cash* or short lived assets = will be converted to cash or
depleted in one year. Examples: *accounts/notes receivable*, and CD's
Fixed or long lived assets AKA Capital Assets - Answer-Buildings, land, equipment AKA
*capital assets*
Tangible asset - Answer-*touch* or seen. Examples: building, equipment and other
resources. Will *deteriorate and depreciate*
Intangible asset - Answer-Non-current, non-physical assets. Examples: Lease holds,
copyrights and patents and goodwill
*B*ookkeeping - Answer-the initial recording of *b*usiness transactions, mechanical
Capital - Answer-a term embracing *funds acquired from several different sources*.
cash from other sources (government, real estate, income)
Investment Capital - Answer-the cash used to purchase real estate and equipment to
construct buildings
Working capital - Answer-the *excess of current assets over current liabilities*. It is the
measure of the *facility's ability to meet its obligations*
Fixed expenses - Answer-remain constant regardless of volume of business. Examples:
rent, depreciation, property taxes, some insurances) No matter what % of occupancy
the facility will have these
Variable expenses - Answer-Change in direct proportion to the change in volume or
services. (Food, medical supplies, and utilities)
What are internal controls? - Answer-financial procedures taken to protect or safeguard
against theft and waste
Lein - Answer-a *claim* or *charge* on particular property for *payment* on a *debt or
obligation*.
Operating expenses - Answer-incurred in the normal operation of the facility. Examples:
salaries, employee benefits, utilities, materials, supplies rent and *depreciation*
What are the 3 types of business organization - Answer-1. sole proprietorship
2. partnership
3. corporation
Correct Answers
What is working capital - Answer-the excess of current assets over current liability. The
goal to decrease liabilities and increase assets
The matching principle dictates what? - Answer-the principle of depreciation
Acid-Test Ratio - Answer-the measure of a firm's ability to pay it's current liabilities a
short period of time (immediately). The higher the ratio the better the company will be
able to pay its bills on time.
Quick Assets/Current Liabilities = Acid-test ratio
return on equity - Answer-Means of assessing a company's profitability
current ratio - Answer-the measure of a firms ability to pay current debts
> 1 able to pay bills
< 1 unable to pay bills
Assets/Liabilities = current ratio
Non current assets are? - Answer-Property/Plant/Equipment: fixed assets, capital
assets or plant assets)
What is aging of accounts receivable? - Answer-summarizes unpaid balances in terms
of age groups.
Office of Inspector General? - Answer-Department charged with Id'ing fraud, abuse and
wasteful spending
What is the primary purpose/value of financial management? - Answer-it provides
accounting information that the administrator can use to make decisions and manage
the facility.
1. Control standards
2. measures performance
Accounting - Answer-the process that includes bookkeeping,(budgeting, financial
reports, auditing and accounting systems)
, Assets - Answer-things of value (things owned, cash, equipment, real estate *accounts
receivable*) expressed in money terms
current asset - Answer-*cash* or short lived assets = will be converted to cash or
depleted in one year. Examples: *accounts/notes receivable*, and CD's
Fixed or long lived assets AKA Capital Assets - Answer-Buildings, land, equipment AKA
*capital assets*
Tangible asset - Answer-*touch* or seen. Examples: building, equipment and other
resources. Will *deteriorate and depreciate*
Intangible asset - Answer-Non-current, non-physical assets. Examples: Lease holds,
copyrights and patents and goodwill
*B*ookkeeping - Answer-the initial recording of *b*usiness transactions, mechanical
Capital - Answer-a term embracing *funds acquired from several different sources*.
cash from other sources (government, real estate, income)
Investment Capital - Answer-the cash used to purchase real estate and equipment to
construct buildings
Working capital - Answer-the *excess of current assets over current liabilities*. It is the
measure of the *facility's ability to meet its obligations*
Fixed expenses - Answer-remain constant regardless of volume of business. Examples:
rent, depreciation, property taxes, some insurances) No matter what % of occupancy
the facility will have these
Variable expenses - Answer-Change in direct proportion to the change in volume or
services. (Food, medical supplies, and utilities)
What are internal controls? - Answer-financial procedures taken to protect or safeguard
against theft and waste
Lein - Answer-a *claim* or *charge* on particular property for *payment* on a *debt or
obligation*.
Operating expenses - Answer-incurred in the normal operation of the facility. Examples:
salaries, employee benefits, utilities, materials, supplies rent and *depreciation*
What are the 3 types of business organization - Answer-1. sole proprietorship
2. partnership
3. corporation
