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CAE Key Terms - ASAE Exam with 100% correct answers $7.99   Add to cart

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CAE Key Terms - ASAE Exam with 100% correct answers

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CAE Key Terms - ASAE Exam with 100% correct answers

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  • June 17, 2024
  • 11
  • 2023/2024
  • Exam (elaborations)
  • Questions & answers
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CAE Key Terms - ASAE Exam
Segregation of Duty - ANS-No individual should control all 4 aspects of a financial
transaction.
Initiation (check request)
Authorization (approval to pay)
Asset custody (keeping the checkbook)
Recording transaction (posting)

Clean Audit - ANS-An opinion that provides the *highest level of assurance* that the:
-Statement of Financial Position
-Statement of Activities
-Statement of Cash Flows
are all fairly presented.

Accounting Services Levels - ANS-Audit (greatest level of assurance)
Review (limited scope - uncovers misstatements)
Compilation (no assurance of accuracy)

Sarbanes-Oxley - ANS-The two provisions that impact non-profits are:
1. Whistle-blower protection
2. Prohibition of document destruction upon commencement of a federal investigation

Management Letter - ANS-A letter issued by an independent auditor that communicates
what levels that management needs to address in order to come into compliance with
GAAP accounting practices.

Statement of Activities - ANS-Shows financial activity by month and on a year-to-date
basis.
Reports:
Revenue generated
Expenses incurred
Results in net income or net loss

Statement of Cash Flows - ANS-Helps creditors determine ability to generate future
cash flow to meet obligations. Cash flow and ability to convert assets into cash
important to maintain financial flexibility.

, Accrual-basis Accounting - ANS-Recognizes revenues when earned and expenses
when incurred.
This is a best practice in association accounting. It gives a better picture than cash
accounting.
Allocate dues when earned monthly rather than lump sum when received.

Chart of Accounts - ANS-Lists all the line item accounts being used.

Liquidity Ratio - ANS-Measures ability to pay *short term obligations*.

Current Ratio - ANS-Total Current Assets / Total Current Liabilities

Profitability Ratio - ANS-Profits / Losses (over a period of time).

Quick Ratio - ANS-Measures the ability to pay current debts.

Current Assets (inventory and pre-paids) / Total Current Liabilities

Reserve Ratio - ANS-Measures liquidity.

Expendable Net Assets / Total Annual Expenses

Coverage Ratio - ANS-Projections for interest and principal payments to creditors and
investors.
Can you cover things?

Net Assets - ANS-Assets *after* liabilities have been paid.

Maslow's Hierarchy of Needs - ANS-A theory of human motivation:
Fulfilled bottom to top:
Self-Actualization
Esteem
Love/Belonging
Safety
Physiological
*SSASS* (survival, safety, affiliation, self-esteem, self-actualization)

Statement of Purpose - ANS-The reason for an association's existence.
This is crucial in determining if an association can be a non-profit and tax-exempt
organization.

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