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CFA CFA I Exam
CFA Level I Chartered Financial Analyst (Page 101 )

Updated On: 26-Jan-2026
Page 101 of 793
PDF with 3960 Questions

What is the after tax cash flow of the investment?

  1. $52,919.
  2. $35,985.
  3. $26,275.
  4. $42,646.

Answer(s): D

Explanation:

NI + DEP EXP - PRIN PMT =
35,985 + 13,322 - 6,661 = 42,646



To carry out a comparative analysis of a firm's financial statements over a period of more than 3-4 years, one should use ________.

  1. year-to-year change analysis
  2. horizon analysis
  3. ratio analysis
  4. index-number trend analysis

Answer(s): D

Explanation:

To carry out a comparative statement analysis over a long period of time, you can express the financial statement numbers in terms of a common base. This base could be one of the years for which financial statements are available or can be arbitrarily set to a number like 100. This process then converts the financial statement quantities into indices and these can be analyzed more conveniently.



A firm's financial audit ensures all of the following EXCEPT:

  1. The company is managing its risks within the guidelines specified in its charter.
  2. There are adequate controls and checks in place in its accounting systems.
  3. There are no material errors or omissions in its financial reports.
  4. The management is not misstating its performance.

Answer(s): A

Explanation:

It is not a financial audit function to check on the reasonableness of the risks undertaken by the institution.



The loss from an uncollectible account is:

  1. an asset
  2. a liability
  3. a regular expense of doing business
  4. a reduction in revenue

Answer(s): C

Explanation:

The benefit from selling on credit to customers far outweighs the cost of losses from uncollectible accounts.
These losses are a regular expense of doing business.



Topaz Metals Inc. produces precious metals from its mining operations. The selling price for its product is reasonably assured, the units are interchangeable, and the costs of selling and distributing the product are insignificant. In order for Topaz to recognize revenue as early in the revenue cycle as is permitted under generally accepted accounting principles, the revenue recognition method that Topaz should use is the ________.

  1. percentage-of-completion method
  2. production method
  3. cash method
  4. completed-contract method
  5. cost recovery method

Answer(s): B

Explanation:

Revenue is recognized when the conditions of "realized" or "realizable" and earned are met. If products are readily realizable because they are salable at reliably determinable prices without significant effort, revenues may be recognized at completion of production.



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