Practice Test GeeksCFO - Certified Chief Financial Officer Practice Test
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CFO Financial Reporting & Accounting Flashcards

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

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  1. Under U.S. GAAP, which revenue recognition standard replaced the previous industry-specific guidance and is now the primary framework for recognizing revenue?

    Answer: ASC 606

    ASC 606 (Revenue from Contracts with Customers) established a five-step model for revenue recognition, replacing dozens of prior industry-specific standards.

  2. What is the key difference between the cash basis and accrual basis of accounting?

    Answer: Cash basis records transactions when cash changes hands; accrual basis records when earned or incurred regardless of cash flow

    Accrual accounting matches revenues to the period earned and expenses to the period incurred, while cash basis only records transactions when cash is received or paid.

  3. What is 'goodwill' on a balance sheet, and how is it currently tested under U.S. GAAP?

    Answer: The premium paid over fair value in an acquisition, tested annually for impairment

    Goodwill represents the excess purchase price over the fair value of identifiable net assets acquired and must be tested for impairment at least annually under ASC 350.

  4. Under ASC 842 (the new U.S. GAAP lease standard), how are operating leases now recorded on the balance sheet by lessees?

    Answer: As a right-of-use (ROU) asset and a corresponding lease liability

    ASC 842 requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for virtually all leases with terms over 12 months.

  5. What is the difference between 'basic' and 'diluted' earnings per share (EPS)?

    Answer: Basic EPS uses weighted average shares outstanding; diluted EPS also includes the effect of all potentially dilutive securities

    Diluted EPS includes the potential impact of options, warrants, convertible debt, and other dilutive instruments on the share count, providing a more conservative measure.

  6. What is the purpose of the statement of cash flows, and what are its three sections?

    Answer: Shows sources and uses of cash; sections are operating, investing, and financing activities

    The cash flow statement reconciles the change in cash, separating cash generated from operations, cash used in investing activities, and cash from financing activities.

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