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

WACC reflects the blended cost of all financing sources and is the standard hurdle rate for NPV analysis.

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

A bank credit memo represents income credited by the bank that has not yet been recorded in the books, so it increases the book balance.

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

Segregation of duties ensures no single employee can initiate, approve, and record a payment, eliminating the primary fraud opportunity.

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

A lower AR turnover means receivables are taking longer to convert to cash, suggesting looser credit policies or weaker collections.

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

Under ASC 842, if the lease term is for the major part of the asset's remaining economic life (typically ≥75%), it is classified as a finance lease.

CNA - Certified National Accountant Practice Test

CNA - Certified National Accountant Practice Test

CNA Skills and Competencies 2