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General Practice Test Flashcards

7 cards from real CPFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 General Practice Test flashcards as text

  1. A company's debt-to-equity ratio increasing over time indicates rising:

    Answer: Financial leverage

    A higher debt-to-equity ratio reflects greater reliance on debt financing.

  2. Which of the following is a use of cash in the cash flow statement?

    Answer: Purchasing equipment

    Buying equipment is an investing outflow that uses cash.

  3. The break-even point in units is found by dividing fixed costs by:

    Answer: Contribution margin per unit

    Break-even units equal fixed costs divided by the contribution margin per unit.

  4. Sensitivity analysis in capital budgeting examines how NPV changes when:

    Answer: One input variable changes at a time

    Sensitivity analysis varies a single input to gauge its effect on NPV.

  5. Which type of risk arises from a company's use of debt financing?

    Answer: Financial risk

    Financial risk stems from fixed obligations created by debt financing.

  6. Goodwill on a balance sheet most commonly arises from:

    Answer: An acquisition paid above fair value of net assets

    Goodwill records the premium paid over the fair value of acquired net assets.

  7. An annuity differs from a perpetuity in that an annuity:

    Answer: Has a finite number of payments

    An annuity makes equal payments for a set period, while a perpetuity continues indefinitely.