COA COA Financial Management & Budgeting 3

Question 1

A capital expenditure (CapEx) differs from an operating expenditure (OpEx) because CapEx:

Accepted Answer

Involves purchasing long-term assets rather than day-to-day expenses

Answer

Capital expenditures are investments in long-term assets (like equipment or buildings), while operating expenditures cover routine day-to-day business costs.

Question 2

In the context of office procurement, the three-way match process verifies that:

Accepted Answer

The purchase order, receiving report, and vendor invoice all agree

Answer

The three-way match is an internal control that compares the PO, the goods receipt document, and the vendor invoice to prevent payment errors or fraud.

Question 3

Which financial ratio measures how quickly a business can pay its short-term liabilities with its most liquid assets?

Accepted Answer

Quick ratio

Answer

The quick ratio (cash + marketable securities + receivables divided by current liabilities) measures immediate short-term liquidity, excluding inventory.

Question 4

An accrual in accounting means:

Accepted Answer

Revenue or expense is recorded when earned or incurred, regardless of cash flow

Answer

Accrual accounting records revenues when earned and expenses when incurred, not necessarily when cash is exchanged, providing a more accurate financial picture.

Question 5

What is the primary purpose of an internal audit in an office environment?

Accepted Answer

To evaluate and improve the effectiveness of internal controls and processes

Answer

Internal audits assess whether financial controls, compliance procedures, and operational processes are functioning effectively and identify areas for improvement.

(COA) Certified Office Administration Practice Test

(COA) Certified Office Administration Practice Test

COA COA Financial Management & Budgeting 3