CFI CBCA EXAM STUDY GUIDE | QUESTIONS AND ANSWERS |
LATEST EXAM
What is the main goal of using business writing fundamentals? - CORRECT
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? - CORRECT 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? - CORRECT 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? -
CORRECT 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? - CORRECT ANSWER - High asset turnover ratio
Select the correct formula to calculate the operating margin ratio. - CORRECT
ANSWER - Operating Margin Ratio = EBIT / Revenue
Select the correct formula to calculate the inventory turnover ratio. -
CORRECT ANSWER - Inventory Turnover Ratio = Cost of Goods Sold /
Average Inventory
,Which of the following most likely indicates strong "Capital" for a company? -
CORRECT ANSWER - Unutilized lines of credit or loans
Which of the following statements on collateral is NOT correct? - 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? - CORRECT ANSWER - PEST analysis
Select the loan contract with the lowest risk. - CORRECT ANSWER - A
demand loan with monthly payments secured by assets
Which is not one of the three main financial statements? - CORRECT
ANSWER - Statement of equity
What does the balance sheet indicate? - CORRECT ANSWER - The financial
strength of the business
Financing activities - CORRECT ANSWER - Issuing shares and bonds
Operating activities - CORRECT ANSWER - Payments to suppliers;
Depreciation and amortization expense
Investing activities - CORRECT ANSWER - Buying and selling equipment
Which is not a section in the financial statement note disclosures? - CORRECT
ANSWER - Management discussion and analysis
Balance Sheet - CORRECT ANSWER - Retained earnings; Share captial
,Income Statement - CORRECT ANSWER - Rent expense
Cash Flow Statement - CORRECT 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? -
CORRECT ANSWER - $2.1 million
Intangible assets - CORRECT ANSWER - Items of value, which have no
physical substance, that are used to generate revenues
Authorized shares - CORRECT ANSWER - The total number of shares a
company can sell
Contingencies - CORRECT ANSWER - Events that may or may not happen,
depending on certain circumstances
Commitments - CORRECT ANSWER - Future obligations that a company has
agreed to
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? - CORRECT
ANSWER - $3,000
What line item is not found in the statement of shareholders' equity? -
CORRECT ANSWER - Debt issued or repurchased
What is not true about a partnership? - CORRECT ANSWER - Partners cannot
be held liable for a debt
, Which line item usually accounts for direct labor? - CORRECT ANSWER -
Cost of goods sold
Select the statements below which are true. Select all that apply. - CORRECT
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? - CORRECT ANSWER - Adverse,
unqualified, qualified, and disclaimer of opinion
Which of the following statements regarding a review engagement is false? -
CORRECT 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). - CORRECT ANSWER - Debt to equity
ratio; Working capital ratio
Which of the following tools is NOT used to analyze a company? - CORRECT
ANSWER - Porter's five forces
Which of the following tools are used to analyze a company? - CORRECT
ANSWER - Firm lifecycle, Ansoff's matrix, SWOT analysis
In assessing the PESTEL factors, consumer disposable income is an example of:
- CORRECT ANSWER - Economic factors
Read the following passage and determine which of the PESTEL factors the
described business is facing:
Fresh and Co. is a local grocery store operating in a small town in Seattle since
2010. The store sells fresh vegetables, fruits, meat, dairy, and other packaged
products. In recent years, people in the neighborhood have shown increasing
LATEST EXAM
What is the main goal of using business writing fundamentals? - CORRECT
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? - CORRECT 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? - CORRECT 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? -
CORRECT 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? - CORRECT ANSWER - High asset turnover ratio
Select the correct formula to calculate the operating margin ratio. - CORRECT
ANSWER - Operating Margin Ratio = EBIT / Revenue
Select the correct formula to calculate the inventory turnover ratio. -
CORRECT ANSWER - Inventory Turnover Ratio = Cost of Goods Sold /
Average Inventory
,Which of the following most likely indicates strong "Capital" for a company? -
CORRECT ANSWER - Unutilized lines of credit or loans
Which of the following statements on collateral is NOT correct? - 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? - CORRECT ANSWER - PEST analysis
Select the loan contract with the lowest risk. - CORRECT ANSWER - A
demand loan with monthly payments secured by assets
Which is not one of the three main financial statements? - CORRECT
ANSWER - Statement of equity
What does the balance sheet indicate? - CORRECT ANSWER - The financial
strength of the business
Financing activities - CORRECT ANSWER - Issuing shares and bonds
Operating activities - CORRECT ANSWER - Payments to suppliers;
Depreciation and amortization expense
Investing activities - CORRECT ANSWER - Buying and selling equipment
Which is not a section in the financial statement note disclosures? - CORRECT
ANSWER - Management discussion and analysis
Balance Sheet - CORRECT ANSWER - Retained earnings; Share captial
,Income Statement - CORRECT ANSWER - Rent expense
Cash Flow Statement - CORRECT 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? -
CORRECT ANSWER - $2.1 million
Intangible assets - CORRECT ANSWER - Items of value, which have no
physical substance, that are used to generate revenues
Authorized shares - CORRECT ANSWER - The total number of shares a
company can sell
Contingencies - CORRECT ANSWER - Events that may or may not happen,
depending on certain circumstances
Commitments - CORRECT ANSWER - Future obligations that a company has
agreed to
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? - CORRECT
ANSWER - $3,000
What line item is not found in the statement of shareholders' equity? -
CORRECT ANSWER - Debt issued or repurchased
What is not true about a partnership? - CORRECT ANSWER - Partners cannot
be held liable for a debt
, Which line item usually accounts for direct labor? - CORRECT ANSWER -
Cost of goods sold
Select the statements below which are true. Select all that apply. - CORRECT
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? - CORRECT ANSWER - Adverse,
unqualified, qualified, and disclaimer of opinion
Which of the following statements regarding a review engagement is false? -
CORRECT 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). - CORRECT ANSWER - Debt to equity
ratio; Working capital ratio
Which of the following tools is NOT used to analyze a company? - CORRECT
ANSWER - Porter's five forces
Which of the following tools are used to analyze a company? - CORRECT
ANSWER - Firm lifecycle, Ansoff's matrix, SWOT analysis
In assessing the PESTEL factors, consumer disposable income is an example of:
- CORRECT ANSWER - Economic factors
Read the following passage and determine which of the PESTEL factors the
described business is facing:
Fresh and Co. is a local grocery store operating in a small town in Seattle since
2010. The store sells fresh vegetables, fruits, meat, dairy, and other packaged
products. In recent years, people in the neighborhood have shown increasing
