QUESTION: 17

What most accurately describes a reason why organizations use financial reports?

To differentiate company financial data from industry competitors to prevent loss of proprietary information
To provide subjective information to key constituents that reflects the company’s performance in the most favorable manner depending on stakeholder priorities
To create a historical record of financial performance and identify trends that may justify changes in strategy
To promote consistency of communication regarding company performance and value

Answer(s): D

The Alpha company ships an order to a customer on March 1st and invoices the customer for the product with the shipment, with payment terms of net 30 days. The customer’s payment is received on April 5th. The payment clears the bank and shows on Alpha’s account on April 8th. If Alpha is using accrual accounting, when does it record the revenue for this sale?

March 1st
March 31st
April 5th
April 8th

Answer(s): A

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QUESTION: 19

What is a “profit model?”

The intention or purpose of the business
A descriptor for how the company works
The financial objectives of the organization
The plan for how the organization generates revenue and makes money

Answer(s): D

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QUESTION: 20

The XYZ Company opened a new manufacturing facility with a capital investment of 10,000,000. The cost to obtain the capital was 8%. In its first year of operations, the facility’s net operating profit after taxes was 10,500,000. What was the economic value added (EVA) using the EVA formula?

500,000
840,000
8,000,000
9,700,000

Answer(s): D

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QUESTION: 17

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QUESTION: 19

QUESTION: 20

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