AP AP Financial Management & Budgeting

Question 1

Which budgeting approach requires each department to justify all expenditures from scratch each period?

Accepted Answer

Zero-based budgeting

Answer

Incremental budgeting

Answer

Rolling budget

Answer

Activity-based budgeting

Question 2

What is the primary purpose of a cash flow forecast in AP financial management?

Accepted Answer

To predict future cash availability and potential shortfalls

Answer

To calculate net profit margins

Answer

To determine employee bonuses

Answer

To assess inventory turnover rates

Question 3

A variance report shows actual spending is $15,000 over a $50,000 budget. What is the variance percentage?

Accepted Answer

30%

Answer

25%

Answer

15%

Answer

33%

Question 4

Which financial ratio measures a company's ability to pay short-term obligations using its most liquid assets?

Accepted Answer

Quick ratio

Answer

Debt-to-equity ratio

Answer

Return on equity

Answer

Gross profit margin

Question 5

In AP financial planning, what does the term 'encumbrance' refer to?

Accepted Answer

Funds reserved for a committed but not yet paid expense

Answer

A long-term debt obligation

Answer

A type of revenue recognition

Answer

An asset depreciation method

Question 6

Which type of cost remains constant regardless of production volume within a relevant range?

Accepted Answer

Fixed cost

Answer

Variable cost

Answer

Semi-variable cost

Answer

Marginal cost