AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 301:

  Since the inception of ABC Company's pension plan, 1,500 employees qualified and were paid pensions of $500 million after retirement, of which 700 employees were those who earned $110,000 or more and received $200 million in pension benefits. When the company filed for bankruptcy in 2010, the IRS claimed back taxes from the company stating that the pension plan was not qualified under ERISA. On what basis was the IRS MOST LIKELY making its claim?

  A. Adequate funds were not available to meet the plan's obligations.
  B. Pension benefits were not safeguarded when the pension plan was terminated.
  C. The company failed to remit its PBGC premiums.
  D. The plan did not meet the minimum coverage requirements.
  D. The plan did not meet the minimum coverage requirements.

• Question 302:

  A company converts the expense processing for its sales team from reimbursement by check to providing the team with travel and entertainment cards. Immediately, the company's expenses for the sales force increase by 10%, with no concurrent increase in sales volumes. What aspect should the company have covered in their policies for card use to prevent the increased expenses?

  A. Access control
  B. Approved uses
  C. Vulnerability management
  D. Definition of responsibilities
  B. Approved uses

• Question 303:

  A company sells products to customers on credit, generating accounts receivable. The company uses the accrual accounting method. Once the company collects good funds from its customers, what is the impact on the financial statements of the company?

  A. Cash balance is not affected, and income is increased.
  B. Cash balance is increased, and income is decreased.
  C. Cash balance is increased, and income is not affected.
  D. Cash balance is increased, and income is increased.
  C. Cash balance is increased, and income is not affected.

• Question 304:

  A company's Chief Financial Officer assigns a team reporting to the Treasurer to restructure the company's complex debt instruments and equipment leasing arrangements. The team executes the required settlement transactions using wire payments to facilitate the new debt structure, and in the process violates the lending requirements of the company's bank. What should the Treasurer have done to prevent the violation?

  A. Set up an exception management process.
  B. Established covenant monitoring and compliance controls.
  C. Restricted access to the company's payment processing system.
  D. Segregated the team's duties for the debt structuring and transaction activities.
  B. Established covenant monitoring and compliance controls.

• Question 305:

  Measurement of a company's liquidity includes the calculation of all of the following EXCEPT:

  A. current ratio.
  B. cash turnover.
  C. return on equity.
  D. quick ratio.
  C. return on equity.

• Question 306:

  When will a depositor receive ledger and collected credit for a western check deposited at

  2:00 P.M. Wednesday?

  

  Ledger Credit - Collected Credit

  A. Wednesday - Thursday
  B. Wednesday - Friday
  C. Thursday - Thursday
  D. Thursday - Friday
  B. Wednesday - Friday

• Question 307:

  An employee who became vested in his/her employer's retirement plan upon reaching five years of service decides to resign after working for seven years.

  

  However, he/she will not reach retirement age for another six years. Referring to the employee's annual earnings above, if the plan is structured as a cash balance plan, what is the value of the employee's plan if benefits accrued at 8% per year and future annual salary inflation is 3%?

  A. $0
  B. $34,720
  C. $42,000
  D. $50,150
  B. $34,720

• Question 308:

  Which of the following are examples of covenants in loan agreements? I.Financial ratios II.Corporate resolutions III.Borrower limitations IV.Borrower obligations

  A. I and III
  B. II and III
  C. I, II, and IV
  D. I, III, and IV
  D. I, III, and IV

• Question 309:

  BF Company, a manufacturer of food products, reported financial information shown in the Exhibit for the end of the year. BF Company is subject to covenants in its commercial paper program. It is in compliance with which of the following?

  A. Maximum long-term debt to capital of 52.5%
  B. Minimum working capital of $10,000
  C. Maximum dividends of 50% of net income
  D. Minimum cash flow to total debt of 45%
  A. Maximum long-term debt to capital of 52.5%

• Question 310:

  In comparing the U.S. banking system and foreign banking systems, which of the following statements is true?

  A. Most foreign banking systems do not have central banks.
  B. Foreign banking systems typically have more financial institutions than the U.S.
  C. Foreign banking systems are not permitted to own equity investments in corporations and U.S. banks are.
  D. Many foreign banking systems allow notional pooling and U.S. banks do not.
  D. Many foreign banking systems allow notional pooling and U.S. banks do not.