CEFP CHAPTER 1 QUESTIONS WITH
CORRECT ANSWERS | RATED A+
1. Capital Budgeting - CORRECT ANSWER -The planning and investment for a fixed asset
when the expenditure and expected return extend beyond one year.
2. Net Asset Classifications - CORRECT ANSWER -"The amount of total assets minus total
liabilities. Classified differently depending on whether the institution is publicly or
privately funded. Formerly known as fund accounting."
3. Chart of Accounts - CORRECT ANSWER -A listing of the accounts used by an institution to
define each class of items for which money or the equivalent is spent or received.
4. Organizational Teams - CORRECT ANSWER -Teams who keep the existing organizational
structure almost intact.
5. Payback Method - CORRECT ANSWER -The number of years over which the initial capital
outlay will be recovered.
6. Risk Assessment - CORRECT ANSWER -Identification and analysis of potential loss and
liability in key processes, such as accounts receivable, accounts payable, payroll,
procurement, and technology changes.
7. Credits - CORRECT ANSWER -An entry in the right hand column of an account that
increases liability, income, and equity accounts and decreases asset and expense
accounts.
8. Specialty Terms - CORRECT ANSWER -Teams who cross organizational boundaries to
involve a diverse combination of individuals who then address a specific problem or
issue.
, 9. Short-term Debt Financing - CORRECT ANSWER -"Financing for temporary investments.
Sources include the cost of credit, availability of credit, and the influence of a particular
credit on the availability and cost of other sources."
10. Control Environment - CORRECT ANSWER -Sets the tone of the organization, influencing
the consciousness of everyone and providing discipline and structure (i.e., such as
having a code of conduct, code of ethics, and conflict of interest statements for the
organization).
11. Debits - CORRECT ANSWER -An entry in the left hand column of an account that
increases asset and expense accounts and decreases liability, income and equity
accounts.
12. Cash-Basis Accounting - CORRECT ANSWER -Transactions are recorded only when cash
comes into or goes out of the organization.
13. Probability - CORRECT ANSWER -A risk is an event that "may" occur. The probability of it
occurring can range anywhere from just above 0 % to just below 100%.
14. Economic Order Quantity (EOQ) - CORRECT ANSWER -Determining the order quantity
that minimizes the total inventory holding costs and ordering costs.
15. Actual vs. Budget Comparison - CORRECT ANSWER -"Comparison of actual costs to
budget is generally superior to comparisons against past performance. When properly
prepared, budgets represent the plan, stated in monetary terms, which has been
formulated to meet the objectives of the organization."
16. Exception Analysis - CORRECT ANSWER -"Attention is focused on the relatively small
number of items for which actual performance is significantly different from the
standard."
CORRECT ANSWERS | RATED A+
1. Capital Budgeting - CORRECT ANSWER -The planning and investment for a fixed asset
when the expenditure and expected return extend beyond one year.
2. Net Asset Classifications - CORRECT ANSWER -"The amount of total assets minus total
liabilities. Classified differently depending on whether the institution is publicly or
privately funded. Formerly known as fund accounting."
3. Chart of Accounts - CORRECT ANSWER -A listing of the accounts used by an institution to
define each class of items for which money or the equivalent is spent or received.
4. Organizational Teams - CORRECT ANSWER -Teams who keep the existing organizational
structure almost intact.
5. Payback Method - CORRECT ANSWER -The number of years over which the initial capital
outlay will be recovered.
6. Risk Assessment - CORRECT ANSWER -Identification and analysis of potential loss and
liability in key processes, such as accounts receivable, accounts payable, payroll,
procurement, and technology changes.
7. Credits - CORRECT ANSWER -An entry in the right hand column of an account that
increases liability, income, and equity accounts and decreases asset and expense
accounts.
8. Specialty Terms - CORRECT ANSWER -Teams who cross organizational boundaries to
involve a diverse combination of individuals who then address a specific problem or
issue.
, 9. Short-term Debt Financing - CORRECT ANSWER -"Financing for temporary investments.
Sources include the cost of credit, availability of credit, and the influence of a particular
credit on the availability and cost of other sources."
10. Control Environment - CORRECT ANSWER -Sets the tone of the organization, influencing
the consciousness of everyone and providing discipline and structure (i.e., such as
having a code of conduct, code of ethics, and conflict of interest statements for the
organization).
11. Debits - CORRECT ANSWER -An entry in the left hand column of an account that
increases asset and expense accounts and decreases liability, income and equity
accounts.
12. Cash-Basis Accounting - CORRECT ANSWER -Transactions are recorded only when cash
comes into or goes out of the organization.
13. Probability - CORRECT ANSWER -A risk is an event that "may" occur. The probability of it
occurring can range anywhere from just above 0 % to just below 100%.
14. Economic Order Quantity (EOQ) - CORRECT ANSWER -Determining the order quantity
that minimizes the total inventory holding costs and ordering costs.
15. Actual vs. Budget Comparison - CORRECT ANSWER -"Comparison of actual costs to
budget is generally superior to comparisons against past performance. When properly
prepared, budgets represent the plan, stated in monetary terms, which has been
formulated to meet the objectives of the organization."
16. Exception Analysis - CORRECT ANSWER -"Attention is focused on the relatively small
number of items for which actual performance is significantly different from the
standard."
