Practice Test GeeksCFM - Certified Finance Manager Practice Test
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CFM Financial Reporting & Analysis Flashcards

6 cards from real CFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 CFM Financial Reporting & Analysis flashcards as text

  1. Which of the following is an example of an off-balance-sheet financing arrangement?

    Answer: Operating leases under old GAAP

    Under old GAAP (pre-ASC 842), operating leases did not appear on the balance sheet, making them a classic off-balance-sheet financing arrangement.

  2. What is the primary purpose of footnote disclosures in financial statements?

    Answer: To provide additional detail and context about items in the financial statements

    Footnotes provide supplemental information that clarifies accounting policies, assumptions, and details behind financial statement figures, giving stakeholders a fuller picture.

  3. Earnings Before Interest, Taxes, Depreciation, and Amortization is commonly known as:

    Answer: EBITDA

    EBITDA removes non-cash charges and financing costs from earnings, providing a proxy for operating cash generation that is widely used in valuation and credit analysis.

  4. A company reports $1,000,000 in revenue and a gross margin of 40%. What is the cost of goods sold?

    Answer: $600,000

    Gross margin of 40% means gross profit = $400,000; therefore COGS = $1,000,000 - $400,000 = $600,000.

  5. Which accounting standard governs revenue recognition under US GAAP?

    Answer: ASC 606

    ASC 606 (Revenue from Contracts with Customers) establishes the five-step model for recognizing revenue when control of goods or services transfers to customers.

  6. What is the effect on financial statements when a company uses accelerated depreciation instead of straight-line depreciation?

    Answer: Lower net income and lower asset book value in early years

    Accelerated depreciation records higher depreciation expense in early years, reducing net income and asset book values sooner, though total depreciation over the asset's life is the same.