CPS CPS Financial Management & Budgeting 2

Question 1

Which of the following is an example of a fixed expense for a business?

Accepted Answer

Monthly building lease payment

Answer

A fixed expense remains constant regardless of business activity level, such as a lease or insurance premium paid each month.

Question 2

What does the term 'fiscal year' mean in a business context?

Accepted Answer

A 12-month accounting period that may or may not align with the calendar year

Answer

A fiscal year is any 12-month period used for financial reporting and budgeting purposes; it doesn't have to run January–December.

Question 3

When processing expense reports, what supporting document is most important for reimbursement?

Accepted Answer

An original receipt showing itemized costs

Answer

Original itemized receipts are the primary substantiation required for expense reimbursement under most corporate and IRS policies.

Question 4

Which financial ratio measures a company's ability to pay short-term obligations with its most liquid assets?

Accepted Answer

Current ratio

Answer

The current ratio (current assets ÷ current liabilities) measures liquidity and a company's ability to cover short-term debts.

Question 5

A secretary asked to prepare a purchase order (PO) should include all of the following EXCEPT:

Accepted Answer

Employee personal bank account

Answer

A purchase order includes vendor details, item descriptions, quantities, and pricing — never the employee's personal financial information.

CPS - Certified Professional Secretary Practice Test