AP AP Financial Management & Budgeting 2

Question 1

What does GAAP stand for in the context of US financial reporting?

Accepted Answer

Generally Accepted Accounting Principles

Answer

General Accounting and Audit Principles

Answer

Government Approved Accounting Practices

Answer

Global Accounting and Assessment Policies

Question 2

A department's budget is $120,000 for the year. By the end of Q2, $75,000 has been spent. Is the department on track?

Accepted Answer

No, because $75,000 exceeds the 50% midyear benchmark of $60,000

Answer

Yes, because $75,000 is less than $120,000

Answer

Yes, because budget absorption over 50% is acceptable

Answer

No, because the department should have spent less than $50,000

Question 3

Which accounting principle states that revenue should be recorded when earned, not when cash is received?

Accepted Answer

Accrual principle

Answer

Matching principle

Answer

Conservatism principle

Answer

Cost principle

Question 4

In a capital budget, what is the payback period?

Accepted Answer

The time required for an investment to generate returns equal to its initial cost

Answer

The time it takes to repay a bank loan

Answer

The period over which an asset is depreciated

Answer

The fiscal year in which a major purchase is planned

Question 5

What is the purpose of a rolling forecast in financial management?

Accepted Answer

To provide a continuously updated financial outlook by adding future periods as past periods close

Answer

To lock in the annual budget without changes

Answer

To calculate employee performance bonuses

Answer

To document past expenditures for auditors

Question 6

Which financial statement summarizes a company's revenues and expenses over a specific period?

Accepted Answer

Income statement

Answer

Balance sheet

Answer

Cash flow statement

Answer

Statement of retained earnings