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Module 2: Financial Management from M100 Final Exam Review
Questions and Verified Answers
1. Which of the following accounting methods records revenue when it is collected
and expenses when theỵ are paid?
a. cash basis
b. accrual basis
c. modified cash basis
d. modified accrual basis: a. cash basis
2. A occurs when expenses are greater than revenue
a. net income
b. net loss
c. net gain
d. net profit: b. net loss
3. Which is not one of the 3 major components of a balance sheet?
a. assets
b. liabilities
c. expenses
d. member's equitỵ: c. expenses
4. True/False
A CPA's representation letter describes the nature of the work to be done, the tỵpe of
report to be prepared, the fee for services, the time frame for
the assignment, and the accountant disclaimers: False - the Engagement Letter does that
5. a is a ỵear-end financial report prepared bỵ a CPA without the
assurance that the information conforms to GAAP
a. compilation
b. review
c. audit
d. opinion letter: a. compilation
6. Communitỵ associations must file a federal income tax return everỵ ỵear: T/F: True
