Question 1

Under accrual basis of accounting, revenues are recognized when earned.

Options :

A : True

B : False

Answer: A

Question 2

Which are a measure of the amount of resources used or consumed in providing a service, not cashout flows?

Options :

A : Operating income

B : Credit

C : Revenue

D : Expense

Answer: D

Question 3

The formula for times interest earned ratio is:

Options :

A : [{(excess of revenues _ expenses) + interest expense}/ expected expense]

B : [(excess of revenues over expenses _ interest expense) / interest revenue]

C : [(excess of revenues over expenses + interest expense) / interest expense]

D : [(excess of revenues over expenses + interest expense) / interest expense]

Answer: C

Question 4

Which of the following is NOT the step in expense variance?

Options :

A : Identify the amount of variance due to fixed costs

B : Develop a flexible expense budget

C : Calculate actual volume for each expense

D : Calculate the expense variance due to changes in volume and other factors.

Answer: C

Question 5

Debt service coverage is equal to:

Options :

A : (gross income + debts + depreciation + amortization) / maximum half year debt service payments

B : (net income + interest + depreciation + amortization) / maximum annual debt service payments

C : (net income + expenses + depreciation + amortization) / minimum annual interest service payments

D : (net income + revenues + appreciation + amortization) / minimum half year interest service payments

Answer: B

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