Practice Test Geeks(ACE) Airport Certified Employee Practice Test
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Airport Financial Management Flashcards

7 cards from real ACE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Airport Financial Management flashcards as text

  1. Which financial risk arises when an airport's revenues are heavily concentrated in a single airline that subsequently reduces service?

    Answer: Concentration risk

    Concentration risk occurs when dependence on a dominant carrier exposes the airport to severe revenue loss if that carrier reduces operations.

  2. What does 'defeasance' mean in the context of airport bond financing?

    Answer: Setting aside sufficient funds in escrow to retire outstanding bonds

    Defeasance involves depositing securities into an irrevocable escrow trust sufficient to meet all future bond payments, effectively retiring the debt.

  3. An airport uses 'activity-based costing' (ABC) primarily to:

    Answer: Assign indirect costs more accurately to specific services or cost centers

    ABC traces overhead costs to the activities that drive them, enabling more accurate cost allocation to services and facilities.

  4. Which ratio measures an airport's short-term ability to pay its current obligations using its most liquid assets?

    Answer: Current ratio

    The current ratio (current assets ÷ current liabilities) measures short-term liquidity and ability to meet near-term obligations.

  5. FAA Order 5100.38 provides guidance on which airport financial management topic?

    Answer: Airport Improvement Program (AIP) handbook procedures

    FAA Order 5100.38 is the AIP Handbook that governs grant application procedures, eligibility, and program management.

  6. What is the maximum PFC level that the FAA currently authorizes airports to charge per enplaned passenger?

    Answer: $4.50

    The FAA authorizes a maximum PFC of $4.50 per enplaned passenger under current regulations.

  7. Which best describes the 'enterprise fund' accounting model used by most US commercial service airports?

    Answer: Airports are accounted for like a business, using full accrual accounting to track revenues and expenses

    Enterprise funds apply full accrual accounting, recognizing revenues when earned and expenses when incurred, mirroring private-sector financial reporting.