CERTIFIED TRADE FINANCE PROFESSIONAL
CTFP EXAM 2026 MASTER REVIEW MANUAL
◉ ACCELERATED DEPRECIATION. Answer: A depreciation (see
definition) method, which provides for a larger expense deduction in
the earlier years of an asset's depreciable life. Some methods are
sum of the year's digits (commonly known as rule of 78's), double
declining balance of modified acceleration cost recovery system
(MACRS).
◉ ACCELERATION CLAUSE. Answer: A provision in a financial
instrument, which provides that the occurrence of a default by one
party makes that party's outstanding balance to the other party
immediately due and payable.
◉ ACE DEPRECIATION. Answer: Method of depreciation used to
determine a taxpayer's adjusted current earnings, the ace
adjustment for AMT.
◉ ACCOMMODATION PARTY. Answer: One who signs an instrument
in any capacity for the purpose of lending his name to another party
to the instrument.
,◉ ACCORD AND SATISFACTION. Answer: The settlement of an
obligation or dispute with something other than performance of the
original agreement or full enforcement of an action.
◉ ACCOUNTS PAYABLE. Answer: Amounts owed by a business to its
creditors.
◉ ACCOUNTS RECEIVABLE. Answer: Amounts owed a business by
its debtors. The term is usually used in reference to amounts owed
by customers.
◉ ACCRUED EXPENSES. Answer: Expenses incurred but not yet
paid.
◉ ACCRUED INCOME. Answer: Income earned but not yet received.
◉ ACCRUED INTEREST. Answer: Interest due but not yet paid.
◉ ACCRUAL BASIS. Answer: A method of accounting that shows
expenses as incurred and income as earned even though such
expenses and income have yet to be actually paid or received.
◉ ACID TEST. Answer: The ratio between current assets (less
inventory) and current liabilities as shown on a balance sheet. This
,test provides some indication of a party's liquidity. (Also known as
the "quick ratio".)
◉ ACKNOWLEDGMENT. Answer: A formal statement by a party
before a notary public to the effect that they have executed a specific
instrument or document.
◉ ASSET DEPRECIATION RANGE (ADR). Answer: A system for the
depreciation of the costs of most assets for purposes of federal
income taxation. The ADR system was substantially replaced by the
ACRS system pursuant to the Economic Recovery Tax Act of 1981
and replaced itself by MACRS in the 1986 Tax Reform Act
◉ AD VALOREM TAX. Answer: A tax on the ownership of property.
◉ ADDITIONAL INSURED. Answer: A party other than a party in
whose name insurance is issued who is also protected against losses
covered by such policy.
◉ ADVANCE RENTALS. Answer: One or more lease payments
required to be paid to the lessor at the beginning of the lease term. A
lease, commonly paid "in advance", requires the first payment up
front. The lessor can negotiate any number of additional rentals to
be paid in advance with the first month's rent.
, ◉ ADVANCE RULING. Answer: A request directed to the Internal
Revenue Service, which seeks an advance ruling that a particular
transaction will be recognized as a lease (or some other specific type
of transaction). Such rulings have been requested in leveraged lease
transactions.
◉ AFFIDAVIT. Answer: A statement by a person sworn to before a
notary public.
◉ AFTER-ACQUIRED PROPERTY CLAUSE. Answer: A provision in a
security agreement that gives the creditor a security interest in the
property of the debtor acquired after the date of the security
agreement, which is normally found in addition to blanket lien
language in a security agreement.
◉ AGENT. Answer: A person who has legal authority to act for and
represent another party in dealing with third parties.
◉ AGREEMENT. Answer: The bargain of the parties in fact as found
in their language or by implication from other circumstances.
◉ ALL-RISK INSURANCE. Answer: An insurance policy, which covers
an insured against loss from any peril other than, those specifically
excluded by the terms of the policy.
CTFP EXAM 2026 MASTER REVIEW MANUAL
◉ ACCELERATED DEPRECIATION. Answer: A depreciation (see
definition) method, which provides for a larger expense deduction in
the earlier years of an asset's depreciable life. Some methods are
sum of the year's digits (commonly known as rule of 78's), double
declining balance of modified acceleration cost recovery system
(MACRS).
◉ ACCELERATION CLAUSE. Answer: A provision in a financial
instrument, which provides that the occurrence of a default by one
party makes that party's outstanding balance to the other party
immediately due and payable.
◉ ACE DEPRECIATION. Answer: Method of depreciation used to
determine a taxpayer's adjusted current earnings, the ace
adjustment for AMT.
◉ ACCOMMODATION PARTY. Answer: One who signs an instrument
in any capacity for the purpose of lending his name to another party
to the instrument.
,◉ ACCORD AND SATISFACTION. Answer: The settlement of an
obligation or dispute with something other than performance of the
original agreement or full enforcement of an action.
◉ ACCOUNTS PAYABLE. Answer: Amounts owed by a business to its
creditors.
◉ ACCOUNTS RECEIVABLE. Answer: Amounts owed a business by
its debtors. The term is usually used in reference to amounts owed
by customers.
◉ ACCRUED EXPENSES. Answer: Expenses incurred but not yet
paid.
◉ ACCRUED INCOME. Answer: Income earned but not yet received.
◉ ACCRUED INTEREST. Answer: Interest due but not yet paid.
◉ ACCRUAL BASIS. Answer: A method of accounting that shows
expenses as incurred and income as earned even though such
expenses and income have yet to be actually paid or received.
◉ ACID TEST. Answer: The ratio between current assets (less
inventory) and current liabilities as shown on a balance sheet. This
,test provides some indication of a party's liquidity. (Also known as
the "quick ratio".)
◉ ACKNOWLEDGMENT. Answer: A formal statement by a party
before a notary public to the effect that they have executed a specific
instrument or document.
◉ ASSET DEPRECIATION RANGE (ADR). Answer: A system for the
depreciation of the costs of most assets for purposes of federal
income taxation. The ADR system was substantially replaced by the
ACRS system pursuant to the Economic Recovery Tax Act of 1981
and replaced itself by MACRS in the 1986 Tax Reform Act
◉ AD VALOREM TAX. Answer: A tax on the ownership of property.
◉ ADDITIONAL INSURED. Answer: A party other than a party in
whose name insurance is issued who is also protected against losses
covered by such policy.
◉ ADVANCE RENTALS. Answer: One or more lease payments
required to be paid to the lessor at the beginning of the lease term. A
lease, commonly paid "in advance", requires the first payment up
front. The lessor can negotiate any number of additional rentals to
be paid in advance with the first month's rent.
, ◉ ADVANCE RULING. Answer: A request directed to the Internal
Revenue Service, which seeks an advance ruling that a particular
transaction will be recognized as a lease (or some other specific type
of transaction). Such rulings have been requested in leveraged lease
transactions.
◉ AFFIDAVIT. Answer: A statement by a person sworn to before a
notary public.
◉ AFTER-ACQUIRED PROPERTY CLAUSE. Answer: A provision in a
security agreement that gives the creditor a security interest in the
property of the debtor acquired after the date of the security
agreement, which is normally found in addition to blanket lien
language in a security agreement.
◉ AGENT. Answer: A person who has legal authority to act for and
represent another party in dealing with third parties.
◉ AGREEMENT. Answer: The bargain of the parties in fact as found
in their language or by implication from other circumstances.
◉ ALL-RISK INSURANCE. Answer: An insurance policy, which covers
an insured against loss from any peril other than, those specifically
excluded by the terms of the policy.
