COA COA Financial Management & Budgeting 1

Question 1

Which financial document summarizes an organization's revenues, expenses, and net income over a specific period?

Accepted Answer

Income statement

Answer

An income statement (also called a profit and loss statement) summarizes revenues and expenses to show net income or loss over a reporting period.

Question 2

A budget that adjusts for changes in activity levels or volume is called a:

Accepted Answer

Flexible budget

Answer

A flexible budget adjusts revenue and expense projections based on actual activity levels, making it useful for performance evaluation.

Question 3

In accounts payable management, the term 'net 30' means:

Accepted Answer

Payment is due within 30 days of the invoice date

Answer

Net 30 is a payment term indicating that the full invoice amount is due within 30 days of the invoice date.

Question 4

Which budgeting method requires managers to justify every line-item expense from scratch each period?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting starts from zero each cycle, requiring justification for all expenditures rather than adjusting prior-period figures.

Question 5

Petty cash is best described as:

Accepted Answer

A small fund used for minor day-to-day office expenses

Answer

Petty cash is a small, accessible fund kept on hand to cover incidental or minor expenses without requiring a formal purchase order.

(COA) Certified Office Administration Practice Test