CFA Exam Question of the Day

Level I | Level II | Level III

2023-09-23

Question:
Comprehensive income is:

Select an Answer:
the change in equity during a period from transactions and other events from non-owner sources.
all past changes and credits excluded from net income.
revenue and expense items that accounting standards exclude from net income.
the change in net income for the complete entity.
Rationale:
Comprehensive income includes net income as well as revenues, expenses, gains and losses that GAAP does not count in net income, provided that these come from non-owners.
2023-09-22

Question:
Which of the following is true?

Select an Answer:
Solvency ratios measure a company's ability to meet its short-term obligations.
Liquidity ratios measure a company's ability to meet its long-term obligations.
Solvency ratios measure a company's ability to meet its long-term obligations.
Activity ratios measure a company's ability to meet its long-term obligations.
Rationale:
A company is solvent if it can meet its obligations in the long-term, including both the current service of these obligations and their eventual repayment.
2023-09-21

Question:
A true-false test consists of six questions. If you guess the answer to each question, what is the probability of getting all six questions correct?

Select an Answer:
0.0156
0.06250
0.03125
none of these answers
0
Rationale:
This is binomial distribution with p = 0.5, q = 0.5, n = 6, r = 6. Therefore:

2023-09-20

Question:
Making and collecting loans and disposing of property, plant, and equipment are what kind of activities?

Select an Answer:
financing
investing
liquidity
operating
Rationale:
Changes in long-term assets such as PP&E and loans receivable are signs of investing activity.
2023-09-19

Question:
The financial statement which summarizes the operating, financing, and investing activities of a firm for a period of time is the:

Select an Answer:
income statement.
statement of financial position.
retained earnings statement.
cash flow statement.
Rationale:
The statement of financial position, or balance sheet, summarizes assets, liabilities, and equity at a point of time.

The income statement deals with revenues, expenses, gains, and losses for a period.

The statement of retained earnings details changes in that account for a period.