International Association of Accessibility Professionals (IAAP) Certified Administrative Professional (CAP) Practice Exam

Which of the following best describes 'deficits' in a cash account?

1. Investment gains.

2. Expenses that exceed revenue.

3. Excess income available.

4. Fixed costs of the organization.

The correct answer is: Expenses that exceed revenue.

The best description of 'deficits' in a cash account is related to expenses that exceed revenue. A deficit occurs when an organization spends more money than it brings in over a certain period. This situation indicates that the financial position is negative, as the outflow of cash outpaces the inflow, leading to a reduction in available funds. Understanding this concept is crucial for managing budgets effectively and ensuring that an organization stays financially healthy. Options like investment gains or excess income available describe positive financial outcomes rather than deficits. Fixed costs, while they are a component of total expenses, do not on their own indicate a deficit unless they exceed the total revenue, which is the key point defining a deficit. Thus, identifying deficits as a consequence of expenses surpassing revenue accurately captures the essence of financial shortfalls in this context.