CAFM Asset Management 2

Question 1

Which depreciation method allocates an equal amount of cost each year over the asset's useful life?

Accepted Answer

Straight-line

Answer

Straight-line depreciation divides the asset's depreciable cost evenly across each year of its useful life.

Question 2

A fleet manager wants to compare the total cost of owning a vehicle versus leasing it. Which metric is most appropriate?

Accepted Answer

Total cost of ownership (TCO)

Answer

TCO accounts for acquisition, fuel, maintenance, insurance, and disposal costs, enabling a fair buy-vs-lease comparison.

Question 3

What is the term for the scheduled replacement of fleet vehicles based on predetermined criteria such as age or mileage?

Accepted Answer

Fleet cycling

Answer

Fleet cycling refers to systematically replacing vehicles when they reach defined age, mileage, or cost thresholds.

Question 4

An organization chooses not to capitalize a vehicle purchase and instead expenses it immediately. This decision is most influenced by:

Accepted Answer

The company's capitalization threshold policy

Answer

Capitalization threshold policies define the minimum dollar amount that must be treated as a capital asset rather than an expense.

Question 5

Which of the following best describes 'residual value' in fleet asset management?

Accepted Answer

The estimated market value of a vehicle at the end of a lease or ownership period

Answer

Residual value is the projected worth of the vehicle at disposition, which directly affects lease payments and replacement timing decisions.

CAFM - Certified Automotive Fleet Manager Practice Test