CNA Skills and Competencies 2

Question 1

A CNA accountant is preparing a cost-benefit analysis for a capital investment. Which discount rate is most appropriate for evaluating the project's net present value?

Accepted Answer

The company's weighted average cost of capital (WACC)

Answer

The prime lending rate published by the Federal Reserve

Answer

The current 10-year Treasury bond yield

Answer

The company's return on equity from the prior fiscal year

Question 2

When reconciling a bank statement, which item would INCREASE the balance per books?

Accepted Answer

A bank credit memo for interest earned

Answer

Outstanding checks

Answer

Deposits in transit

Answer

NSF check returned by the bank

Question 3

Which internal control procedure is most effective at preventing fictitious vendor payments?

Accepted Answer

Segregating the duties of purchasing, receiving, and payment authorization

Answer

Requiring dual signatures on checks above a threshold

Answer

Rotating accounting staff assignments annually

Answer

Performing monthly bank reconciliations

Question 4

A company's accounts receivable turnover ratio decreased significantly year-over-year. What is the most likely implication?

Accepted Answer

The company extended more lenient credit terms or collection efficiency declined

Answer

Customers are paying invoices more quickly

Answer

Revenue increased substantially during the period

Answer

Operating expenses were reduced during the year

Question 5

Under ASC 842, how should a lessee classify a lease where the lease term is 90% of the asset's remaining economic life?

Accepted Answer

Finance lease

Answer

Operating lease

Answer

Short-term lease exemption applies

Answer

The lease should be expensed immediately

Question 6

Which analytical skill is most critical when identifying errors in a trial balance?

Accepted Answer

Cross-referencing debits and credits to ensure the balance sheet equation holds

Answer

Ability to apply LIFO inventory valuation

Answer

Preparing cash flow projections using the indirect method

Answer

Calculating depreciation under the units-of-production method

Question 7

A manager asks a CNA accountant to exclude a known liability from the balance sheet to improve the debt-to-equity ratio before a loan application. The accountant should:

Accepted Answer

Refuse and explain that omitting known liabilities violates GAAP and professional ethics

Answer

Comply if the amount is immaterial

Answer

Comply only if approved by the CFO

Answer

Reclassify the liability as a contingency footnote instead