CEFP Chapter 1 Questions with Correct Answers 2026 | A+ Rated Complete Study Guide & Practice Test

CEFPCHAPTER 1 QUESTIONS WITH b b b b




CORRECT ANSWERS | RATED A+
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1. Capital Budgeting - CORRECT ANSWER -The planning and investment for a fixed asset
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when the expenditure and expected return extend beyond one year.
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2. Net Asset Classifications - CORRECT ANSWER -"The amount of total assets minus total
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liabilities. Classified differently depending on whether the institution is publicly or
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privately funded. Formerly known as fund accounting."
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3. Chart of Accounts - CORRECT ANSWER -A listing of the accounts used by an institution to
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define each class of items for which money or the equivalent is spent or received.
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4. OrganizationalTeams- CORRECT ANSWER -Teamswho keep theexistingorganizational b b b b b b b b b b




structure almost intact.
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5. Payback Method - CORRECT ANSWER -The number of years over which the initial capital
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outlay will be recovered.
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6. Risk Assessment - CORRECT ANSWER -Identification and analysis of potential loss and
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liability in key processes, such as accounts receivable, accounts payable, payroll,
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procurement, and technology changes.
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7. Credits - CORRECT ANSWER -An entry in the right hand column of an account that
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increases liability, income, and equity accounts and decreases asset and expense
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accounts.
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8. Specialty Terms - CORRECT ANSWER -Teams who cross organizational boundaries to
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involve a diverse combination of individuals who then address a specific problem or
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issue.
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, 9. Short-term Debt Financing - CORRECT ANSWER -"Financing for temporary investments.
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Sources include the cost of credit, availability of credit, and the influence of a particular
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credit on the availability and cost of other sources."
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10. Control Environment - CORRECT ANSWER -Sets the tone of the organization, influencing the
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bconsciousness of everyone and providing discipline and structure (i.e., such as having a
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bcode of conduct, code of ethics, and conflict of interest statements for the organization).
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11. Debits - CORRECT ANSWER -An entry in the left hand column of an account that
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bincreases asset and expense accounts and decreases liability, income and equity
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baccounts.



12. Cash-Basis Accounting - CORRECT ANSWER -Transactions are recorded only when cash
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bcomes into or goes out of the organization.
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13. Probability - CORRECT ANSWER -A risk is an event that "may" occur. The probability of it
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boccurring can range anywhere from just above 0 % to just below 100%.
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14. Economic Order Quantity (EOQ) - CORRECT ANSWER -Determining the order quantity
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bthat minimizes the total inventory holding costs and ordering costs.
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15. Actual vs. Budget Comparison - CORRECT ANSWER -"Comparison of actual costs to
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bbudget is generally superior to comparisons against past performance. When properly
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bprepared, budgets represent the plan, stated in monetary terms, which has been
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formulated to meet the objectives of the organization." b b b b b b b




16. Exception Analysis - CORRECT ANSWER -"Attention is focused on the relatively small
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bnumber of items for which actual performance is significantly different from the
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bstandard."