AP Financial Management & Budgeting Flashcards
6 cards from real AP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 AP Financial Management & Budgeting flashcards as text
What is the difference between a direct cost and an indirect cost?
Answer: Direct costs are traceable to a specific product or project; indirect costs are shared across multiple cost objects
Direct costs can be directly attributed to a specific cost object, while indirect costs (overhead) benefit multiple cost objects and must be allocated.
Which budget type focuses on expected revenues and expenses for a specific project rather than the whole organization?
Answer: Project budget
A project budget outlines the estimated costs and revenues associated with a specific project over its defined timeline.
What does ROI stand for and how is it calculated?
Answer: Return on Investment; (Net Profit / Cost of Investment) × 100
ROI (Return on Investment) is calculated by dividing the net profit from an investment by its cost and expressing the result as a percentage.
In accounts payable, what is a three-way match?
Answer: Verifying that the purchase order, receiving report, and vendor invoice all agree before paying
A three-way match is a control process that compares the purchase order, goods receipt (receiving report), and vendor invoice to ensure consistency before payment is authorized.
What is the purpose of depreciation in financial reporting?
Answer: To allocate the cost of a long-term asset over its useful life
Depreciation systematically allocates the cost of a tangible asset across the periods in which it provides economic benefits.
Which of the following best describes a budget surplus?
Answer: Actual revenues exceed actual expenses, resulting in leftover funds
A budget surplus occurs when actual revenues are greater than actual expenditures, leaving a positive balance of uncommitted funds.