CFO Financial Planning

Question 1

A CFO wants a budget that automatically adjusts expense allowances to actual sales volume. Which budget type fits best?

Accepted Answer

Flexible budget

Answer

A flexible budget recalculates costs for the actual activity level, which makes variance analysis meaningful.

Question 2

Which approach requires every expense to be justified from scratch each planning cycle?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting starts each cost line at zero and requires a justification for each one.

Question 3

A company always keeps a 12-month forecast horizon by adding a new month as each month ends. What is this called?

Accepted Answer

Rolling forecast

Answer

A rolling forecast keeps a constant forward horizon by adding a new period as each one closes.

Question 4

In a master budget, which component is normally prepared first because the others depend on it?

Accepted Answer

Sales budget

Answer

The sales forecast drives production, purchasing, labor, overhead, and cash budgets.

Question 5

Budgeted sales are 10,000 units, beginning finished goods are 1,500 units, and desired ending finished goods are 2,000 units. How many units must be produced?

Accepted Answer

10,500

Answer

Production equals sales plus desired ending inventory minus beginning inventory: 10,000 + 2,000 − 1,500 = 10,500.

CFO - Certified Chief Financial Officer Practice Test

CFO - Certified Chief Financial Officer Practice Test

CFO Financial Planning