CFI CBCA Core Course Exam 2026
Questions and Answers
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
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,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
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
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,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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, 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
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Questions and Answers
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,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
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, 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
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
