CAFM Business and Information Management 3 — Questions and Answers
Question 1: A fleet manager is evaluating whether to lease or purchase vehicles. Which financial concept is central to comparing the true long-term cost of each option?
- Gross vehicle weight rating (GVWR)
- Net present value (NPV) (Correct answer)
- Miles per gallon (MPG)
- Invoice price
Correct answer: Net present value (NPV)
Net present value discounts future cash flows to today's dollars, enabling a true apples-to-apples comparison of lease vs. purchase options.
Question 2: Under GAAP, how are operating leases reported on a company's balance sheet following ASC 842?
- Not recorded on the balance sheet at all
- Recorded as a right-of-use asset and corresponding lease liability (Correct answer)
- Recorded only as a footnote disclosure
- Recorded solely as an expense on the income statement
Correct answer: Recorded as a right-of-use asset and corresponding lease liability
ASC 842 requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for most operating leases.
Question 3: Which key performance indicator (KPI) best measures the administrative efficiency of a fleet management department?
- Average vehicle age
- Cost per vehicle managed (overhead ratio) (Correct answer)
- Number of vehicles in the fleet
- Average fuel price paid
Correct answer: Cost per vehicle managed (overhead ratio)
Cost per vehicle managed (overhead ratio) measures how efficiently the fleet department administers its portfolio relative to fleet size.
Question 4: A fleet manager discovers that fuel card data is not syncing with the fleet management system. What is the FIRST troubleshooting step?
- Replace all fuel cards immediately
- Verify the data integration feed and API connection between the two systems (Correct answer)
- Manually re-enter all transactions from paper receipts
- Disable the fuel card program temporarily
Correct answer: Verify the data integration feed and API connection between the two systems
The first step is to verify the integration feed and API connection, as a broken data link is the most common cause of sync failures.
Question 5: Which document formalizes the agreed-upon service levels between a fleet manager and an outsourced fleet management provider?
- Purchase order
- Service level agreement (SLA) (Correct answer)
- Certificate of insurance
- Bill of lading
Correct answer: Service level agreement (SLA)
A service level agreement (SLA) defines performance expectations, metrics, and remedies between the fleet manager and an outsourced provider.
Question 6: When analyzing total cost of ownership (TCO), which cost element is most often underestimated in fleet planning?
- Vehicle purchase price
- Downtime and lost productivity costs (Correct answer)
- Insurance premiums
- Registration fees
Correct answer: Downtime and lost productivity costs
Downtime and lost productivity costs are frequently overlooked in TCO models because they are indirect and harder to quantify than direct costs.
Question 7: A fleet manager wants to implement a spend management policy to control unauthorized purchases. Which tool is MOST effective?
- Petty cash fund for all purchases
- Centralized fleet charge cards with merchant category code (MCC) restrictions (Correct answer)
- Reimbursement-based expense reports only
- Blanket purchase orders with no spending limits
Correct answer: Centralized fleet charge cards with merchant category code (MCC) restrictions
Fleet charge cards with MCC restrictions limit purchases to authorized vendor types, preventing unauthorized or off-policy spending at the point of sale.
CAFM Business and Information Management 3
A fleet manager is evaluating whether to lease or purchase vehicles.
Which financial concept is central to comparing the true long-term cost of each option?