Fleet Financial Management Flashcards
7 cards from real CAFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fleet Financial Management flashcards as text
A fleet manager notices that fixed costs remain constant regardless of fleet utilization. Which of the following is a fixed fleet cost?
Answer: Vehicle depreciation
Depreciation is a fixed cost because it accrues by time (or a set schedule) regardless of how many miles the vehicle is driven.
In fleet financial analysis, what does the term 'lifecycle cost' encompass?
Answer: All costs from acquisition through disposal including fuel, maintenance, and financing
Lifecycle cost (total cost of ownership) includes every cost incurred from vehicle acquisition through final disposal, giving a complete financial picture.
Which financial analysis method discounts future cash flows back to today's value to evaluate a fleet investment?
Answer: Net present value (NPV)
NPV discounts all future cash inflows and outflows to present value using a discount rate, allowing comparison of fleet investment alternatives.
A fleet manager is preparing a zero-based budget. What distinguishes this from a traditional incremental budget?
Answer: Every expense must be justified from scratch regardless of prior year spending
Zero-based budgeting requires justification for all expenditures anew each cycle, eliminating automatic carryover of prior-year costs.
When a fleet vehicle is sold at auction for more than its book value, the difference is classified as:
Answer: A gain on sale of asset
Proceeds exceeding book value at disposal create a gain on sale of asset, which may be subject to taxes including depreciation recapture.
A fleet manager needs to justify a telematics investment to the CFO. The most persuasive financial argument would focus on:
Answer: Quantified ROI through fuel savings, reduced accidents, and lower maintenance costs
CFOs respond to quantified financial returns; demonstrating measurable cost reductions from telematics data makes the strongest business case.
Which IRS depreciation method allows fleet managers to deduct a larger portion of a vehicle's cost in the early years of ownership?
Answer: Modified Accelerated Cost Recovery System (MACRS)
MACRS is the IRS-mandated depreciation system for U.S. tax purposes and uses accelerated rates, providing larger deductions in early years.