26 Questions
Which ratio measures the liquidity risk of a business and its ability to generate cash to meet short-term financial commitments?
Current Ratio
Which ratio measures whether a business is comfortable handling its debt obligations?
Debt to Equity Ratio
What is the formula for the current ratio?
Current assets divided by current liabilities
What is the formula for the profit margin?
Net profit divided by net revenue x 100
Which of the following is the primary goal of financial management in an architectural practice?
To achieve and sustain profits
What is the formula for calculating profit in a business?
Revenue minus expenses
What is the purpose of setting aside a percentage of profit as a capital reserve?
To cover expenses in lean years
Why is financial planning important in an architectural practice?
To guide strategic decisions
Which of the following statements accurately describes the Average Collection Period (ACP)?
ACP measures the average number of days it takes to receive payment from the invoice date.
Which of the following is a component of the Balance Sheet?
Current Assets
What does the term 'Accounts Payable' refer to?
A record of accounts of money payable to consultants and to other suppliers for expenses.
Which type of accounting is done within the architectural practice?
Internal accounting
Which type of accounting includes the preparation and examination of financial statements to express an opinion on the financial position of the practice?
External accounting
What is the highest level of assurance provided by an external accountant?
Audit
Which accounting system records all income and expenses as they occur in the general ledger?
Accrual system
Which financial statement shows the financial position of a company at a given period?
Balance Sheet
Which financial statement focuses on profitability and growth?
Income Statement
Which financial statement is used to understand how to realize profit into cash?
Cashflow Statement
Which financial statement is a detailed explanation of the change in cash on the balance sheet?
Cashflow Statement
Which of the following is a reason why a well-prepared cashflow projection may be necessary for negotiating a line of credit with the bank?
To accurately monitor and control expenses
What can an accountant provide advice on in relation to banks approving loans and lines of credit?
Information required by banks
In what chapter of the text can you find information on various methods of compensation or fee calculation?
Chapter 3.9 - Architectural Services and Fees
Which of the following is NOT a responsibility of an accountant in an architect practice?
Designing architectural plans
What should be considered when preparing a cashflow forecast?
The architect's payment history
What is the role of a Chartered Professional Accountant (CPA) in an architect practice?
Adhering to professional standards
When is the best time to negotiate for a line of credit with a bank?
When financing is not required
Test your knowledge on cashflow forecasting and learn about the importance of monitoring actual revenues and expenses. Explore how client payment history and software programs can aid in accurate forecasting.
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