CAA Financial Management & Ethics Flashcards
6 cards from real CAA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CAA Financial Management & Ethics flashcards as text
Which financial ratio measures a company's ability to meet short-term obligations using its most liquid assets?
Answer: Quick ratio
The quick ratio (acid-test ratio) excludes inventory from current assets, providing a stricter liquidity measure than the current ratio.
Under the AICPA Code of Professional Conduct, which principle requires a CPA to be straightforward and honest in professional relationships?
Answer: Integrity
The integrity principle requires CPAs to be honest, candid, and free from deception in all professional and business relationships.
The weighted average cost of capital (WACC) is best described as:
Answer: The average return required by all of a company's capital providers, weighted by their proportions
WACC blends the cost of equity and cost of debt (after tax) weighted by their respective proportions in the capital structure.
Which capital budgeting method calculates the discount rate at which the net present value of a project equals zero?
Answer: Internal rate of return (IRR)
IRR is the discount rate that makes the NPV of all cash flows from a project equal to zero.
A certified accounting analyst discovers a material misstatement in financial statements that management refuses to correct. What is the most appropriate next step?
Answer: Escalate to those charged with governance (e.g., audit committee)
Professional standards require escalating unresolved material misstatements to those charged with governance before considering resignation.
Which of the following is an example of an operating activity in the cash flow statement under US GAAP?
Answer: Cash received from customers
Cash received from customers is a primary operating activity because it relates directly to the company's core revenue-generating operations.