Financial and Asset Management Flashcards
7 cards from real CAM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial and Asset Management flashcards as text
A flight department wants to compare the total cost of owning an aircraft versus chartering. Which costing approach captures acquisition, operating, and disposal costs over the aircraft's service period?
Answer: Life cycle costing
Life cycle costing evaluates all costs from acquisition through disposal, making it ideal for own-versus-charter comparisons.
Which of the following is classified as a direct operating cost (DOC) for a business aircraft?
Answer: Fuel consumed per flight hour
Direct operating costs vary with flight activity, and fuel is the classic example, while hangar, salaries, and insurance are fixed costs.
An aviation manager is preparing next year's budget and starts every line item at zero, requiring justification for all expenses. What budgeting method is being used?
Answer: Zero-based budgeting
Zero-based budgeting requires every expense to be justified from scratch each budget cycle rather than adjusting prior-year figures.
Under U.S. GAAP, how is the purchase price of a corporate aircraft typically treated on the company's financial statements?
Answer: Capitalized as an asset and depreciated over its useful life
Aircraft are long-lived tangible assets, so their cost is capitalized and depreciated over the useful life.
What is the primary financial advantage of an operating lease compared to purchasing an aircraft outright?
Answer: It reduces upfront capital outlay and preserves cash for other uses
An operating lease avoids a large capital purchase, freeing cash and often keeping the asset off the balance sheet under legacy rules.
A flight department's actual maintenance spending is $50,000 over budget at mid-year. What should the aviation manager do first?
Answer: Analyze the variance to identify its cause before taking corrective action
Sound budget control requires variance analysis to determine root causes before corrective measures are chosen.
Which metric best helps an aviation manager justify the flight department's value to senior corporate leadership?
Answer: Cost per hour compared with the productivity value of executive travel time saved
Linking operating cost to executive time savings and productivity frames the department as a business asset rather than an expense.