CAM Financial and Asset Management 2

Question 1

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?

Accepted Answer

Life cycle costing

Answer

Life cycle costing evaluates all costs from acquisition through disposal, making it ideal for own-versus-charter comparisons.

Question 2

Which of the following is classified as a direct operating cost (DOC) for a business aircraft?

Accepted Answer

Fuel consumed per flight hour

Answer

Direct operating costs vary with flight activity, and fuel is the classic example, while hangar, salaries, and insurance are fixed costs.

Question 3

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?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting requires every expense to be justified from scratch each budget cycle rather than adjusting prior-year figures.

Question 4

Under U.S. GAAP, how is the purchase price of a corporate aircraft typically treated on the company's financial statements?

Accepted Answer

Capitalized as an asset and depreciated over its useful life

Answer

Aircraft are long-lived tangible assets, so their cost is capitalized and depreciated over the useful life.

Question 5

What is the primary financial advantage of an operating lease compared to purchasing an aircraft outright?

Accepted Answer

It reduces upfront capital outlay and preserves cash for other uses

Answer

An operating lease avoids a large capital purchase, freeing cash and often keeping the asset off the balance sheet under legacy rules.

(CAM) Certified Aviation Manager Practice Test

(CAM) Certified Aviation Manager Practice Test

CAM Financial and Asset Management 2