CFI CBCA Verified Multiple Choice and
Conceptual Actual Exam Questions With
Reviewed 100% Correct Detailed Answers
Guaranteed Pass!!Current Update
1. Business Structures
There are three basic forms for business owners to consider: - ANSWER Sole
Proprietorship
Partnership
Corporation
2. Sole Proprietorship - ANSWER • The simplest form of organization
• One person owning and running the business
• There is no separation between the owner and the business
3. Partnership - ANSWER • The business is owned by two or more people
• Greater access to capital
• Partners are held jointly and severally liable for the actions of one another
4. Corporation - ANSWER • Viewed as a separate entity in the eyes of tax
authorities and the law
• The owners have shares and the management runs the company on behalf of
the shareholders
,• Shareholders cannot be held liable for a debt
5. Limited Liability Company - ANSWER • Common in some, but not all
countries
• LLC's can be owned by individuals, partnerships, corporations, or a combination
• LLC's are "flow through businesses" - profits are distributed out to members and
reported on their separate tax returns
• Election may be available to allow retained profits to be taxed at a corporate tax
rate
6. Business structure of joint venture - ANSWER Joint ventures act very
similarly to partnerships, and may be operated by any of the following:
• Partnership
• Corporation
• Co-ownership
• Trust
7. A franchise might be structured as a: - ANSWER • Proprietorship
• Partnership
• Corporation
Lending to a franchise is no different than lending to any of these structures.
8. How Sole Proprietorships impact financial statements - ANSWER
Owner's Equity = Beginning Balance + NI + Contributions - Withdrawals =
Closing Balance
, 9. How Partnerships impact financial statements - ANSWER Partners'
Equity = Beginning Balance + NI + Contributions - Withdrawals = Closing
Balance
10. How Limited Liability Companies impact financial statements - ANSWER
Members' Equity = Beginning Balance + NI + Contributions -
Withdrawals = Closing Balance
11. Conclusion - ANSWER 1. The balance sheet informs readers about the
strength of the business and its long-term viability
2. The equity statement supports a key component of the balance sheet
3. It is critical to understand the differences between various types of business
structures
12. The income statement, also called the profit and loss statement, or the
statement of operations, contains - ANSWER the transactions of a
company for a period of time.
13. Reading the Income Statement and Statement of Cash Flows Session
Objectives - ANSWER 1. Understand the key components of the income
statement
2. Understand the key components of the statement of cash flows and how profit
and cash differ
14. Number of transactions in a FY: - ANSWER 0 - 99999
, 15. The income statement can be presented using either: - ANSWER •
Single-step methodology
• Multiple-step methodology
16. Single-Step - ANSWER Revenue + Gains = Total revenue
Expenses + Losses = Total expenses
Net Income = Total Revenue - Total expenses
17. Multiple-Step - ANSWER Revenue - Cost of Goods Sold = Gross Profit
Gross Profit - Selling, General & Administrative = Operating Income
Operating Income + Gains - Losses - Other Expenses = Pre-tax income Income
Pre-tax income - Income Taxes = Net Income
18. Cost of goods sold - ANSWER manufacturing industry
19. Cost of sales - ANSWER service-based industry
20. Cost of goods sold (manufacturing industry) or cost of sales (service-based
industry) may be shown as a summarized line item or may be broken down
to its expense items, such as: - ANSWER Direct materials (e.g. materials
used in manufacturing)
Direct labor (e.g. professional services delivered) Direct overhead (to the
production of the goods or services)
Conceptual Actual Exam Questions With
Reviewed 100% Correct Detailed Answers
Guaranteed Pass!!Current Update
1. Business Structures
There are three basic forms for business owners to consider: - ANSWER Sole
Proprietorship
Partnership
Corporation
2. Sole Proprietorship - ANSWER • The simplest form of organization
• One person owning and running the business
• There is no separation between the owner and the business
3. Partnership - ANSWER • The business is owned by two or more people
• Greater access to capital
• Partners are held jointly and severally liable for the actions of one another
4. Corporation - ANSWER • Viewed as a separate entity in the eyes of tax
authorities and the law
• The owners have shares and the management runs the company on behalf of
the shareholders
,• Shareholders cannot be held liable for a debt
5. Limited Liability Company - ANSWER • Common in some, but not all
countries
• LLC's can be owned by individuals, partnerships, corporations, or a combination
• LLC's are "flow through businesses" - profits are distributed out to members and
reported on their separate tax returns
• Election may be available to allow retained profits to be taxed at a corporate tax
rate
6. Business structure of joint venture - ANSWER Joint ventures act very
similarly to partnerships, and may be operated by any of the following:
• Partnership
• Corporation
• Co-ownership
• Trust
7. A franchise might be structured as a: - ANSWER • Proprietorship
• Partnership
• Corporation
Lending to a franchise is no different than lending to any of these structures.
8. How Sole Proprietorships impact financial statements - ANSWER
Owner's Equity = Beginning Balance + NI + Contributions - Withdrawals =
Closing Balance
, 9. How Partnerships impact financial statements - ANSWER Partners'
Equity = Beginning Balance + NI + Contributions - Withdrawals = Closing
Balance
10. How Limited Liability Companies impact financial statements - ANSWER
Members' Equity = Beginning Balance + NI + Contributions -
Withdrawals = Closing Balance
11. Conclusion - ANSWER 1. The balance sheet informs readers about the
strength of the business and its long-term viability
2. The equity statement supports a key component of the balance sheet
3. It is critical to understand the differences between various types of business
structures
12. The income statement, also called the profit and loss statement, or the
statement of operations, contains - ANSWER the transactions of a
company for a period of time.
13. Reading the Income Statement and Statement of Cash Flows Session
Objectives - ANSWER 1. Understand the key components of the income
statement
2. Understand the key components of the statement of cash flows and how profit
and cash differ
14. Number of transactions in a FY: - ANSWER 0 - 99999
, 15. The income statement can be presented using either: - ANSWER •
Single-step methodology
• Multiple-step methodology
16. Single-Step - ANSWER Revenue + Gains = Total revenue
Expenses + Losses = Total expenses
Net Income = Total Revenue - Total expenses
17. Multiple-Step - ANSWER Revenue - Cost of Goods Sold = Gross Profit
Gross Profit - Selling, General & Administrative = Operating Income
Operating Income + Gains - Losses - Other Expenses = Pre-tax income Income
Pre-tax income - Income Taxes = Net Income
18. Cost of goods sold - ANSWER manufacturing industry
19. Cost of sales - ANSWER service-based industry
20. Cost of goods sold (manufacturing industry) or cost of sales (service-based
industry) may be shown as a summarized line item or may be broken down
to its expense items, such as: - ANSWER Direct materials (e.g. materials
used in manufacturing)
Direct labor (e.g. professional services delivered) Direct overhead (to the
production of the goods or services)
