CAM Financial Management & Budgeting Flashcards
6 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 6 CAM Financial Management & Budgeting flashcards as text
Which budgeting method requires managers to justify every expense from zero each budget cycle?
Answer: Zero-based budgeting
Zero-based budgeting requires all expenses to be justified anew each period rather than basing them on prior-year figures.
A cost that remains constant regardless of the level of business activity is called a:
Answer: Fixed cost
Fixed costs, such as rent or salaries, do not change with fluctuations in production or service volume.
What financial document summarizes an organization's assets, liabilities, and equity at a specific point in time?
Answer: Balance sheet
The balance sheet provides a snapshot of an organization's financial position on a given date.
When actual spending exceeds the budgeted amount for a line item, this is known as a:
Answer: Unfavorable variance
An unfavorable (or adverse) variance occurs when actual costs are higher than budgeted, indicating overspending.
Which financial ratio measures an organization's ability to pay short-term obligations using its most liquid assets?
Answer: Quick ratio
The quick ratio (acid-test ratio) excludes inventory from current assets, providing a stricter liquidity measure than the current ratio.
In capital budgeting, the period required for an investment to generate enough cash flow to recover its initial cost is called the:
Answer: Payback period
The payback period calculates how long it takes for an investment's cumulative cash inflows to equal its initial outlay.