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Financial Management

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Architectural Registration Exam - NCARB A.R.E 5.0 Practice Management Quiz on Financial Management, created by Marita Rose on 15/01/2018.
Marita Rose
Quiz by Marita Rose, updated more than 1 year ago
Marita Rose
Created by Marita Rose over 6 years ago
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Question 1

Question
The (2) broad categories of accounting in the financial management of a firm are?
Answer
  • General Ledger Accounting
  • Project Cost Accounting
  • Basic Accounting
  • Double Entry Bookkeeping

Question 2

Question
Which of the following best describes General Ledger Accounting?
Answer
  • Is basic accounting that keeps track of money flowing into & out of the business & is needed for day-to-day operations, banking, taxes, & auditing; provides firm-wide statements about the overall financial status of the business
  • Tracks revenue, expenses & profit by individual projects

Question 3

Question
General Ledger Accounting is needed for which of the following?
Answer
  • Basic Accounting
  • Keeping track of money flowing into & out of a business
  • Day-to-day operations
  • Banking
  • Taxes
  • Auditing
  • Firm-wide statements about the overall financial status of a business so that firm owners can make decisions crucial to the firm's profitability & survival
  • Tracking revenue, expenses, & profit by individual projects
  • Knowing how the amount of time spent on specific projects affects the financial health of the firm
  • Assisting managers in deciding how to allocate resources, manage projects, & develop accurate proposals for new work

Question 4

Question
Project Cost Accounting is needed for which of the following?
Answer
  • Tracking revenue by individual projects
  • Tracking expenses by individual projects
  • Tracking profit by individual projects
  • Knowing how the amount of time spent on specific projects affects the financial health of a firm
  • Differentiating between projects that are making money & those that are losing money
  • Assisting managers in deciding how to allocate resources
  • Assisting managers in deciding how to manage projects
  • Assisting managers in developing accurate proposals for new work
  • Tracking money flowing into & out of the business & is needed for day-to-day operations, banking, taxes, & auditing
  • Providing firm-wide statements about the overall financial status of the business so that firm owners can make decisions crucial to the firm's profitability & survival

Question 5

Question
Which of the following describe Project Cost Accounting?
Answer
  • Helps managers decide how to allocate resources, manage projects, & develop accurate proposals for new work
  • Tracks revenue, expenses, & profit by individual projects
  • Shows how the amount of time spent on specific projects affects the financial health of a firm
  • Provides firm-wide statements about the overall financial status of a business so that firm owners can make decisions crucial to the firm's profitability & survival
  • Keeps track of money flowing into & out of a business & is needed for day-to-day operations, banking, taxes, & auditing

Question 6

Question
Which of the following correctly describes the, "Amounts owed to the suppliers of goods or services (such as consultants, reproduction companies, or the utility company) that have not yet been paid?"
Answer
  • Accounts Payable
  • Accounts Receiveable
  • Assets
  • Chart of Accounts

Question 7

Question
Which of the following correctly describes, "Money that others owe to a business through invoices for services?"
Answer
  • Accounts Payable
  • Accounts Receivable
  • Assets
  • Chart of Accounts

Question 8

Question
Which of the following correctly describes, "Any type of tangible or intangible resource that can be measured in monetary terms, including current assets, fixed assets, & other assets?"
Answer
  • Assets
  • Accounts payable
  • Accounts receivable
  • Chart of accounts

Question 9

Question
Which of the following correctly describes, "A list of the various accounts a business uses to keep track of money, along with corresponding account numbers used for data processing?"
Answer
  • Chart of Accounts
  • Balance Sheet
  • Profit & Loss Statement
  • Ledger

Question 10

Question
Which of the following describes, "Resources of a business that are converted into cash within one year?"
Answer
  • Assets
  • Fixed Assets
  • Other Assets
  • Current Assets

Question 11

Question
Which of the following describes, "All labor of technical staff, principals, & support staff that is directly chargeable to projects?"
Answer
  • Direct Labor
  • Total Labor
  • Overhead
  • Indirect Labor

Question 12

Question
Which of the following describes, "The expense of employee salaries plus the cost of mandatory & discretionary expenses & benefits such as payroll taxes & health insurance?"
Answer
  • Direct Expense
  • Direct Personnel Expense
  • Overhead
  • Indirect Personnel Expense

Question 13

Question
Which of the following correctly describes, "Voluntary distribution of profits to owners & non-owners, such as performance bonuses, profit sharing, & incentive compensation?"
Answer
  • Discretionary Distribution
  • Profit Distribution
  • Direct Personnel Expense
  • Distribution

Question 14

Question
Which of the following best describes, "Resources that the firm uses & retains for a long period of time, such as equipment & property?"
Answer
  • Assets
  • Current Assets
  • Fixed Assets
  • Other Assets

Question 15

Question
Which of the following correctly describes, "All the revenue generated by a business during a stated period of time?"
Answer
  • Total Revenue
  • Gross Revenue
  • Net Operating Revenue
  • Net Revenue

Question 16

Question
Which of the following correctly describes, "All labor not charged to a specific project or revenue-producing account, such as administration, general office time, & marketing?"
Answer
  • Overhead
  • Indirect Labor
  • Indirect Personnel Expense
  • Direct Labor

Question 17

Question
Which of the following correctly describes, "Claims by people outside the business & claims by the owners of the business against the total assets of the business."
Answer
  • Liabilities
  • Indemnification Clause
  • Personal Injury
  • Privity
  • Tort

Question 18

Question
Which of the following correctly describes, "The money that remains from billing after deducting fees & expenses, reimbursable expenses, & non-reimbursable project-related expenses?"
Answer
  • Net Operating Revenue (Net Revenue)
  • Gross Revenue
  • Total Revenue
  • Revenue

Question 19

Question
Which of the following correctly describes, "Miscellaneous resources such as securities & copyrights?"
Answer
  • Other Assets
  • Current Assets
  • Assets
  • Fixed Assets

Question 20

Question
Which of the following correctly describes, "Expenses incurred to keep a business operating whether or not any revenue is being generated, such as rent, software leases, & fees for power & telephone service?"
Answer
  • Overhead
  • Indirect Expenses
  • Non-Reimbursable Expenses
  • Reimbursable Expenses

Question 21

Question
Net Revenue (NOR) = (Gross Revenue) - ([blank_start]Fees[blank_end] + [blank_start]Expenses[blank_end] + [blank_start]Reimbursable Expenses[blank_end] + [blank_start]Non-Reimbursable[blank_end] Project Related Expenses)
Answer
  • Fees
  • Expenses
  • Reimbursable Expenses
  • Non-Reimbursable

Question 22

Question
Which of the following are the (2) basic accounting methods?
Answer
  • Cash Accounting
  • Accrual Accounting
  • General Ledger Accounting
  • Project Cost Accounting
  • Modified Accrual Basis Method

Question 23

Question
Which of the following apply to Cash Accounting?
Answer
  • revenue & expenses are recognized at the time the business receives the cash or pays a bill
  • Better means of accounting for tracking actual cash flow
  • Fairly simple & is often used by single-person businesses & small businesses
  • Revenue & Expenses are recognized at the time they are earned or incurred, whether or not cash changes hands
  • Gives a better picture of a businesses's long term financial status & provides information that is important for active financial management
  • Best for businesses above a certain size or that maintain inventory are required by the IRS to use accrual accounting

Question 24

Question
Which of the basic accounting methods is best suited for a single person business or small businesses?
Answer
  • Cash Accounting
  • Accrual Accounting
  • Modified Accrual Basis Method
  • Project Cost Accounting

Question 25

Question
Businesses above a certain size or that maintain inventory are required by the IRS to use which basic accounting method?
Answer
  • Cash Accounting
  • Accrual Accounting
  • Project Cost Accounting
  • General Ledger Accounting

Question 26

Question
Which of the following apply to Accrual Accounting?
Answer
  • Revenue & Expenses are recognized at the time they are earned or incurred, whether or not cash changes hands
  • Gives a better picture of a business's long term financial status & provides information that is important for active financial management
  • Businesses above a certain size or that maintain inventory are required by the IRS to use this accounting method
  • Revenue & expenses are recognized at the time the business receives the cash or pays a bill
  • Better at tracking actual cash flow
  • Fairly simple & is often used by single-person businesses & small businesses

Question 27

Question
Which basic accounting method recognizes revenue & expenses at the time the business receives the cash or pays a bill?
Answer
  • Cash Accounting
  • Project Cost Accounting
  • Accrual Accounting
  • Modified Accrual Basis Method

Question 28

Question
Which basic accounting method recognizes revenue & expenses at the time they are earned or incurred, whether or not cash changes hands?
Answer
  • Accrual Accounting
  • Cash Accounting
  • General Ledger Accounting
  • Project Cost Accounting

Question 29

Question
Which of the following is an example of Accrual Accounting?
Answer
  • A firm sends an invoice to a client for $50,000 & that money is listed as revenue even though the client has not yet paid the invoice
  • A firm sends an invoice to a client for $50,000 & that money is listed as revenue only once the client has paid the invoice

Question 30

Question
What is the difference between Accrual Accounting & Modified Accrual Accounting (Modified Accrual Basis Method)?
Answer
  • Records fee revenue, expenses billed to the client, & invoices to the firm by outside consultants
  • Records fee revenue, expenses billed to the client, & invoices to the firm by outside consultants but does NOT include the amounts of fees that have been earned but not yet billed to the client
  • Recognizes revenue & expenses only when actual cash changes hands

Question 31

Question
Which of the following are recorded by the Modified Accrual Basis Method?
Answer
  • Fee Revenue
  • Expenses billed to the client
  • Invoices to the firm by outside consultants
  • The amounts of fees that have been earned but not yet billed to the client

Question 32

Question
Accrual Accounting uses which of the following methods to record & organize all revenue & expenses into individual accounts?
Answer
  • Double-Entry Bookkeeping
  • Journal Accounting
  • Ledger Accounting
  • General Ledger Accounting

Question 33

Question
Which of the following are reasons why Cash Accounting & Accrual Accounting group all revenue & expenses into individual accounts?
Answer
  • Auditing
  • Review
  • Tax Preparation
  • Management
  • Analysis
  • Insurance

Question 34

Question
Which of the following describes, "All transactions are listed chronologically in a journal. They are then posted to a ledger where transactions are grouped into individual accounts?"
Answer
  • Double-Entry Bookkeeping
  • General Ledger Accounting
  • Ledger Accounting
  • Bookkeeping

Question 35

Question
Which of the following are the most common types of Accounting Reports?
Answer
  • Balance Sheet
  • Modified Accrual Basis Method
  • Profit & Loss Statement
  • Cash Flow Statement
  • Double Entry Bookkeeping

Question 36

Question
Which of the following is an important aspect of the balance sheet?
Answer
  • Net Worth of the Business (aka Owner's Equity)
  • Total Liabilities
  • Cash Equivalents
  • Cash Flow

Question 37

Question
Which of the following apply to the Balance Sheet?
Answer
  • Summarizes all assets & liabilities & shows the financial position of a business
  • All the assets listed must exactly equal all the liabilities listed
  • The Total Assets must = (Total Liabilities + The Net Worth or Owner's Equity)
  • The Net Worth or Owner's Equity is an important part of this report
  • Lists all the income & expenses of a business for a certain period of time
  • Shows the actual inflows & outflows of cash or cash equivalents

Question 38

Question
Which of the following describe Net Worth?
Answer
  • Owner's Equity
  • = (Total Assets) - (Total Liabilities)
  • The money invested in a business by the owners or stockholders
  • defined as money, checks, or anything else accepted by banks
  • Short-term investments that can be quickly converted into cash, such as short-term certificates of deposit

Question 39

Question
Which of the following describe Owner's Equity?
Answer
  • Net Worth
  • The money invested in a business by the owners or stockholders
  • = (Total Assets) - (Total Liabilities)
  • Short-term investments that can be quickly converted into cash, such as short-term certificates of deposit
  • Defined as money, checks, or anything else accepted by banks

Question 40

Question
Which of the following apply to the Profit & Loss Statement?
Answer
  • Lists all the income & expenses of a business for a certain period of time
  • The difference between all the income & all the expenses gives either the profit or the loss for that period
  • Income Statement
  • Shows the actual inflows & outflows of cash or cash equivalents
  • Summarizes all assets & liabilities & shows the financial position of a business

Question 41

Question
Which of the following apply to the Cash Flow Statement
Answer
  • Shows the actual inflows & outflows of cash or cash equivalents
  • This statement is important because a business's month to month financial health depends on being able to meet payroll & pay bills
  • Lists all the income & expenses of a business for a certain period of time
  • Summarizes all assets & liabilities & shows the financial position of a business
  • Cash is defined as money, checks, or anything else accepted by banks

Question 42

Question
Which of the following describes Cash Equivalents?
Answer
  • Short-term investments that can be quickly converted into cash, such as short-term certificates of deposit
  • Current Assets
  • Defined as money, checks, or anything else accepted by banks
  • Resources of a business that are converted into cash within one year

Question 43

Question
Profit Planning & Financial Management Reports include which of the following?
Answer
  • Active Planning
  • Monitoring & Controlling of financial information
  • Acting on financial information

Question 44

Question
What is the fundamental equation for financial planning in any profit oriented business?
Answer
  • (Profit + Expenses) = Revenue; If the business will make its targeted profit, & controls expenses, what is the appropriate revenue that needs to be generated to achieve that targeted profit
  • (Revenue - Expenses) = Profit; Profit is whatever may be left over after expenses are subtracted from revenue
  • (Net Operating Revenue) / (Total Direct Labor Costs)
  • (Total Indirect Expenses) / (Total Direct Labor Costs)

Question 45

Question
Which of the following are the (2) typical means to increase revenue?
Answer
  • Increase how much work the firm does
  • Increase Fees
  • Decrease indirect labor
  • Reducing overhead costs

Question 46

Question
Which of the following is one of the highest percentages of overhead?
Answer
  • Indirect Labor (Personnel who do not directly work on projects)
  • Direct Labor
  • Non-Reimbursable expenses
  • Reimbursable Expenses

Question 47

Question
What is the typical means for controlling expenses?
Answer
  • Reducing overhead wherever possible
  • Decreasing reimbursable & non reimbursable expenses
  • Increasing how much work the firm does
  • Increasing Fees

Question 48

Question
Other than the basic accounting reports, which of the following are the typical Planning Reports & Financial Management Reports?
Answer
  • Project Progress Report
  • Office Earnings Report
  • Aged Accounts Receivable Report
  • Time Analysis Report
  • Project Cost Accounting
  • Balance Sheet
  • Profit & Loss Statement
  • Accrual Accounting Report

Question 49

Question
Which of the following apply to Project Progress Reports?
Answer
  • Shows the hours & labor costs for each phase of a project, both for the current reporting period, & the total to date, & compares these numbers with the estimated hours & costs
  • Shows direct costs, such as for consultants, overhead allocations, & reimbursable expenses
  • Gives the project manager & firm management an accurate look at the status of a project & can be used to take corrective action as necessary
  • Summarizes each of the firm's projects in terms of the amount of revenue it has generated, the expenses it has incurred, un-billed services, percentage of completion, & profit or loss to date
  • Shows the status of all invoices for all projects, whether or not they have been paid
  • Tracks revenue, expenses, & profit by individual projects
  • Shows how the amount of time spent on specific projects affects the financial health of a firm

Question 50

Question
Which of the following apply to the Office Earnings Report?
Answer
  • Summarizes each of the firm's projects in terms of the amount of revenue it has generated, the expenses it has incurred, unbilled services, percentage of completion, & profit or loss to date
  • Can help firm management find any projects that may be hurting overall profitability & need remedial action
  • Shows the status of all invoices for all projects, whether or not they have been paid
  • Shows the hours & labor costs for each phase of a project, both for the current reporting period, & the total to date, & compares these numbers with the estimated hours & costs
  • Shows direct costs, such as for consultants, overhead allocations, & reimbursable expenses

Question 51

Question
The office earnings report summarizes each of the firms projects in terms of which of the following?
Answer
  • The amount of revenue it has generated
  • The expenses it has incurred
  • Unbilled serivces
  • Percentage of completion
  • Profit or Loss to date

Question 52

Question
Which of the following apply to Aged Accounts Receivable?
Answer
  • Shows the status of all invoices for all projects, whether or not they have been paid
  • Shows the "age" of each invoice, which is the time from the invoice date to the payment date, or to the current date if still unpaid
  • Shows the hours & labor costs for each phase of a project, both for the current reporting period & the total to date, & compares these numbers with the estimated hours & costs
  • Shows direct costs, such as those for consultants, overhead allocations, & reimbursable expenses
  • Give the project manager & firm management an accurate look at the status of a project & can be used to take corrective action as necessary
  • Summarizes each of the firm's projects in terms of the amount of revenue it has generated, the expenses it has incurred, unbilled services, percentage of completion, & profit or loss to date
  • Can help firm management find any projects that may be hurting overall profitability & need remedial action

Question 53

Question
What is the average collection period of invoices?
Answer
  • Between 60 & 75 Days
  • Between 45 & 60 days
  • Between 75 & 90 Days
  • Between 60 & 90 Days

Question 54

Question
What is the break-even chargeable ratio (utilization rate) for the whole firm & the targeted rate for technical staff?
Answer
  • 65% for the whole firm & 75%-85% for technical staff
  • 65% for the whole firm & 85%-95% for technical staff
  • 75% for the whole firm & 85%-95% for technical staff
  • 70% for the whole firm & 75%-85% for technical staff

Question 55

Question
Which of the following are the Financial Ratios?
Answer
  • Current Ratio
  • Net Profit before Tax
  • Overhead Rate
  • Quick Ratio
  • Revenue per technical staff
  • Revenue per total staff
  • Billing Rate
  • Utilization Rate

Question 56

Question
For accounting purposes, a large plotter is considered:
Answer
  • A current asset
  • A fixed asset
  • A liability
  • An overhead expense

Question 57

Question
Which of the following financial ratios can be used to estimate the required net operating revenue for future budgets, & if the NOR is known, can also estimate staffing levels?
Answer
  • Net Operating Revenue Per Technical Staff Member
  • Net Operative Revenue per Total Staff
  • Current Ratio
  • Quick Ratio

Question 58

Question
Which of the following make up Billing Rates?
Answer
  • Employee's Salary
  • The Costs for that Employee's Fringe Benefits
  • The Cost of Office Overhead
  • An Allowance for Profit

Question 59

Question
How can the hourly billing rate of an employee be determined with the Net Multiplier?
Answer
  • Billing Rate = (Net Multiplier) x (Dollar amount employee is paid hourly)
  • Billing Rate = (Employees Hourly Salary + Fringe Benefits + The Cost of Office Overhead + An allowance for profit)

Question 60

Question
The Net Multiplier accounts for which of the following?
Answer
  • Fringe Benefits
  • Indirect Labor
  • Overhead
  • Profit
  • Hourly Labor Cost per employee

Question 61

Question
What are the (4) basic steps to collecting accounts receivable?
Answer
  • Contract Terms
  • Timely Billing
  • Complete Invoices
  • Regular Procedures for tracking accounts
  • Selection of appropriate project delivery method

Question 62

Question
Which of the following should be included in the contract regarding fee collection?
Answer
  • The basis for the fee
  • When invoices will be sent & in what form
  • When payment is due
  • Any penalties for late payment such as interest charges after 45 day s or some other reasonable period of time
  • Provisions for nonpayment including stopping work on the client's project & making no presentations until the payment has been received
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