CAM CAM Financial Management & Budgeting 2

Question 1

Which accounting method records revenue when earned and expenses when incurred, regardless of cash movement?

Accepted Answer

Accrual accounting

Answer

Accrual accounting matches revenues with the period they are earned and expenses with the period they are incurred.

Question 2

An administrative manager reviewing a vendor invoice notices a charge for services not yet rendered. This is best categorized as a:

Accepted Answer

Prepaid expense

Answer

A prepaid expense is a payment made in advance for goods or services to be received in a future period.

Question 3

Which cost allocation method assigns overhead costs to departments based on each department's proportional use of shared resources?

Accepted Answer

Activity-based costing

Answer

Activity-based costing allocates overhead by identifying cost drivers that reflect actual resource consumption in each activity.

Question 4

A manager is asked to perform a cost-benefit analysis. What is the primary purpose of this analysis?

Accepted Answer

To compare the total expected costs of a project against its anticipated benefits

Answer

Cost-benefit analysis evaluates whether the projected benefits of a decision outweigh its total costs to support sound resource allocation.

Question 5

Internal controls over financial processes are primarily designed to:

Accepted Answer

Prevent and detect errors, fraud, and misuse of assets

Answer

Internal controls are policies and procedures that safeguard assets, ensure accurate financial reporting, and deter fraudulent activity.

(CAM) Certified Administrative Manager Practice Test