26 Questions
Which financial statement shows the financial position of a company at a given period?
Balance Sheet
What is the basic formula of the balance sheet?
Assets = Liabilities + Owner’s Equity
Which financial statement provides a detailed explanation of the change in cash on the balance sheet?
Cashflow Statement
What is the primary focus of the income statement?
Profitability and growth
Which of the following is the correct definition of Accounts Payable?
A record of accounts of money payable to consultants and to other suppliers for expenses
What is the formula for calculating the Average Collection Period (ACP)?
Accounts receivable divided by gross revenue x 365
What is the purpose of a Cash Book?
To record the day-to-day cash position of the practice using the cash accounting method
Which type of accounting is done within the architectural practice?
Internal accounting
Which type of accounting provides a lower level of assurance that the financial statements are free of material misstatements?
Review accounting
What is the recommended level of assurance that banks typically require for financial statements?
Review
What is the accounting method required for architecture businesses by the Canada Revenue Agency (CRA), Accounting Standards for Private Enterprises (ASPE), and International Financial Reporting Standards (IFRS)?
Accrual basis
Which of the following is true about cashflow forecasts?
They should be updated monthly
What is the role of a Chartered Professional Accountant (CPA)?
To maintain proper books of account
What is the purpose of establishing a professional relationship with a banker?
To avoid financing day-to-day operations
When is the best time to negotiate for a line of credit with a bank?
When funds for the operation of the practice are not required
Which of the following is a reason why a well-prepared cashflow projection may be necessary to negotiate a line of credit with the bank?
To accurately monitor and control expenses
What is the only possible exception to the principle that all projects should generate a profit?
When undertaking a new and unknown building type
Where can architects find various forms for financial management purposes, including fee calculation?
Chapter 3.11 - Standard Templates for the Management of the Practice
Which of the following is true about financial management in architectural practice?
Financial management helps maximize profit and develop strategies to remain profitable
What is the purpose of a profit in architectural practice?
All of the above
What is the recommended practice for distributing profits in an architectural practice?
Set aside a percentage as a capital reserve and distribute the remaining balance to shareholders and staff
Why is financial planning important in architectural practice?
All of the above
Which one of the following formulas is used to calculate the current ratio?
Current assets divided by current liabilities
What does a current ratio of 1:1 indicate?
The business has $1 in liabilities for every $1 in assets
What does the debt to equity ratio measure?
Whether the business is comfortable handling its debt obligations
What does the profit margin ratio measure?
How much profit is left over after all expenses are accounted for
Test your knowledge on cashflow forecasting and monitoring in this quiz. Learn about the importance of considering payment history and using software programs to prepare accurate forecasts. Explore how to compare actual revenues and expenses with forecasted figures.
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