CAM CAM Financial Management & Budgeting

Question 1

Which budgeting method requires managers to justify every expense from zero each budget cycle?

Accepted Answer

Zero-based budgeting

Answer

Incremental budgeting

Answer

Rolling budgeting

Answer

Activity-based budgeting

Question 2

A cost that remains constant regardless of the level of business activity is called a:

Accepted Answer

Fixed cost

Answer

Variable cost

Answer

Semi-variable cost

Answer

Marginal cost

Question 3

What financial document summarizes an organization's assets, liabilities, and equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

Income statement

Answer

Cash flow statement

Answer

Budget variance report

Question 4

When actual spending exceeds the budgeted amount for a line item, this is known as a:

Accepted Answer

Unfavorable variance

Answer

Favorable variance

Answer

Budget surplus

Answer

Zero variance

Question 5

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

Accepted Answer

Quick ratio

Answer

Debt-to-equity ratio

Answer

Return on investment

Answer

Current ratio

Question 6

In capital budgeting, the period required for an investment to generate enough cash flow to recover its initial cost is called the:

Accepted Answer

Payback period

Answer

Net present value

Answer

Internal rate of return

Answer

Depreciation schedule