Certified Meeting Professional (CMP) Practice Exam

What does a chart of accounts represent?

1. A summary of cash flow

2. A detailed list of revenue and expense categories

3. A forecast of future earnings

4. A balance of assets only

The correct answer is: A detailed list of revenue and expense categories

A chart of accounts serves as an essential organizational tool for financial accounting, providing a detailed list of revenue and expense categories as well as asset, liability, and equity accounts. This structured listing allows businesses to categorize and track financial transactions effectively, facilitating accurate financial reporting and analysis. By using a chart of accounts, organizations can better manage their finances, ensuring that every transaction is recorded in the appropriate category. This categorization supports not just internal budgeting and financial reporting but also external reporting requirements, enabling stakeholders to understand the financial health of the organization. While summaries of cash flow, forecasts of future earnings, and balances of assets are important components of financial management, they require information from the chart of accounts to be accurately generated. The chart itself is foundational, providing the detailed structure necessary for a comprehensive understanding of financial operations and performance.