Mocktest on Financial statement Corporate Reporting

 CMA Part 1 MCQs (Financial Reporting & Analysis – US GAAP)

Section A

MCQs – CMA PART 1

 

1.

A company reports accelerated tax depreciation and straight-line book depreciation. This will MOST likely result in:

A. Deferred Tax Asset

B. Deferred Tax Liability

C. Permanent Difference

D. No tax effect

Answer: 

 

2.

All of the following create Deferred Tax Assets EXCEPT:

A. Warranty accrual

B. Unearned revenue (taxed when received)

C. Installment sales for tax

D. Litigation accrual probable

Answer: 

 

3.

If an asset fails recoverability test under US GAAP, impairment loss equals:

A. Carrying value − Undiscounted CF

B. Undiscounted CF − Fair value

C. Carrying value − Fair value

D. Fair value − Carrying value

Answer: 

 

4.

Which is LEAST likely included in OCI?

A. Pension adjustments

B. Unrealized gain on AFS securities

C. Foreign currency translation

D. Gain on sale of PPE

Answer: 

 

5.

Finance lease classification requires meeting:

A. All criteria

B. Majority of criteria

C. At least one criterion

D. PV ≥ 75% only

Answer: 

 

6.

Factoring without recourse should be accounted for as:

A. Secured borrowing

B. Liability recognition

C. Sale of receivable

D. Deferred revenue

Answer: 

 

7.

Lower of Cost or Market floor equals:

A. NRV

B. Replacement cost

C. NRV − Normal profit margin

D. Historical cost

Answer: 

 

8.

Change in depreciation method is treated as:

A. Prior period adjustment

B. Change in estimate

C. Change in principle retrospective

D. Error correction

Answer: 

 

9.

Discontinued operations are reported:

A. Gross of tax

B. Before extraordinary items

C. Net of tax

D. In OCI

Answer: 

 

10.

Bond issued at discount will:

A. Decrease interest expense over time

B. Increase interest expense over time

C. Keep interest expense constant

D. Reduce cash paid

Answer: 

 

11.

A DTA requires valuation allowance when realization is:

A. Possible

B. Probable

C. More likely than not not realizable

D. Remote

Answer: 

 

12.

Which is NOT cash equivalent?

A. 90-day T-bill

B. 2-month commercial paper

C. 6-month certificate of deposit

D. Demand deposit

Answer: 

 

13.

Under indirect method, gain on sale of equipment is:

A. Added

B. Deducted

C. Ignored

D. OCI

Answer: 

 

14.

Permanent differences affect:

A. Deferred tax

B. Effective tax rate

C. Temporary difference

D. DTL only

Answer: 

 

15.

Operating lease under ASC 842 results in:

A. No liability recorded

B. ROU asset and lease liability

C. Only expense recognition

D. Off-balance sheet

Answer: 

 

16.

Which theory treats preferred shareholders similar to liability?

A. Proprietary

B. Entity

C. Residual

D. Fund

Answer: 

 

17.

R&D costs under US GAAP are:

A. Capitalized

B. Deferred

C. Expensed

D. OCI

Answer: 

 

18.

Software costs are capitalized after:

A. Production

B. Feasibility

C. Sale

D. Research

Answer: 

 

19.

Which increases current ratio?

A. Pay accounts payable

B. Buy inventory cash

C. Issue long-term debt

D. Purchase PPE credit

Answer: 

 

20.

Gross profit margin increases when:

A. COGS increases proportionally

B. Sales decrease

C. Sales grow faster than COGS

D. Operating expense decreases

Answer: 

 

21.

A purchase commitment loss is recognized when:

A. Contract signed

B. Market price < contract price

C. Goods delivered

D. Payment made

Answer: 

 

22.

Which affects CFO under indirect method?

A. Dividend paid

B. Gain on bond retirement

C. Increase in inventory

D. Issue stock

Answer: 

 

23.

OCI items are accumulated in:

A. Retained earnings

B. AOCI

C. APIC

D. Current income

Answer: 

 

24.

Times interest earned uses:

A. Net income

B. EBIT

C. EBITDA

D. CFO

Answer: 

 

25.

If tax rate increases after DTL recorded:

A. Decrease DTL

B. Increase DTL

C. No effect

D. OCI adjustment

Answer: 

 

26.

Which is LEAST relevant for liquidity?

A. Current ratio

B. Quick ratio

C. Debt-to-equity

D. OCF ratio

Answer: 

 

27.

Inventory write-down under LCM:

A. Reversed later

B. Permanent under GAAP

C. OCI

D. Deferred

Answer: 

 

28.

Interest paid classified as:

A. Investing

B. Financing

C. Operating

D. OCI

Answer: 

 

29.

Deferred revenue taxed when received creates:

A. DTL

B. DTA

C. Permanent difference

D. No difference

Answer: 

 

30.

Impairment reversal allowed for:

A. Held for use assets

B. Goodwill

C. Assets held for sale

D. PPE

Answer: 

 

31.

Financial capital maintenance measures profit based on:

A. Physical output

B. Net asset increase

C. Sales growth

D. Cash flow

Answer: 

 

32.

Warranty expense creates:

A. Permanent difference

B. Temporary deductible difference

C. OCI

D. Equity reserve

Answer: 

 

33.

Which reduces operating cash flow?

A. Increase in AP

B. Increase in AR

C. Depreciation

D. Impairment

Answer: 

 

34.

Operating lease expense pattern is:

A. Front-loaded

B. Constant

C. Increasing

D. Zero

Answer: 

 

35.

Bond premium amortization:

A. Increases carrying value

B. Decreases interest expense

C. Increases interest expense

D. No effect

Answer: 

 

36.

Extraordinary items are:

A. Separate line item

B. In OCI

C. Not allowed separately

D. Prior period

Answer: 

 

37.

Leverage ratio MOST directly measures:

A. Profitability

B. Liquidity

C. Long-term solvency

D. Efficiency

Answer: 

 

38.

Installment sales for tax vs accrual for books creates:

A. DTL

B. DTA

C. Permanent

D. No effect

Answer: 

 

39.

Retained earnings is reduced by:

A. Net income

B. Dividends

C. OCI gain

D. Share issuance

Answer: 

 

40.

Which increases ROE?

A. Increase equity proportionately

B. Higher leverage with same income

C. Lower net income

D. Higher assets

Answer: 

 

41.

Factoring with recourse results in:

A. Sale only

B. Liability recognition

C. No entry

D. Deferred tax

Answer: 

 

42.

NRV equals:

A. Selling price − disposal cost

B. Replacement cost

C. Cost − margin

D. Fair value

Answer: 

 

43.

Deferred tax is classified as:

A. Current only

B. Noncurrent only

C. Split

D. OCI

Answer: 

 

44.

A strategic shift qualifies as:

A. OCI

B. Discontinued operations

C. Extraordinary

D. Error

Answer: 

 

45.

Which MOST affects gross profit?

A. SG&A expense

B. Interest

C. COGS

D. Tax expense

Answer: 

 

46.

Cash dividend paid classified as:

A. Operating

B. Investing

C. Financing

D. OCI

Answer: 

 

47.

Debt ratio increases when:

A. Assets increase more than debt

B. Debt increases more than assets

C. Equity increases

D. Income increases

Answer: 

 

48.

Which creates permanent difference?

A. Depreciation difference

B. Municipal bond interest

C. Warranty accrual

D. Installment sale

Answer: 

 

49.

Right-of-use asset amortization for finance lease appears in:

A. COGS

B. Depreciation expense

C. Interest expense

D. OCI

Answer: 

 

50.

Comprehensive income includes:

A. Net income only

B. OCI only

C. Net income + OCI

D. Retained earnings

Answer: 

 

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Section B…

 CMA Part 1 MCQs

 

🔥 Advanced CMA-Style MCQs

 

1.

All of the following create a Deferred Tax Liability under US GAAP EXCEPT:

A. Accelerated tax depreciation

B. Installment sales taxed later

C. Revenue recognized for books before tax

D. Warranty expense accrued for books

Answer: 

 

2.

Which of the following is the MOST correct statement regarding Deferred Tax Assets?

A. They always increase net income

B. They arise from permanent differences

C. They represent future deductible amounts

D. They are recorded only if certain

Answer: 

 

3.

All of the following are included in Other Comprehensive Income EXCEPT:

A. Foreign currency translation adjustments

B. Unrealized gains on AFS securities

C. Pension adjustments

D. Gain on sale of equipment

Answer: 

 

4.

Which of the following is LEAST appropriate when testing long-lived assets for impairment?

A. Compare carrying value with undiscounted cash flows

B. Measure loss as carrying value minus fair value

C. Reverse impairment if value recovers

D. Perform recoverability test first

Answer: 

 

5.

All of the following are criteria for finance lease classification EXCEPT:

A. Ownership transfers

B. Lease term is major part of economic life

C. PV equals 50% of fair value

D. Bargain purchase option exists

Answer: 

 

6.

Which of the following is the MOST correct treatment of R&D costs under US GAAP?

A. Capitalize all development costs

B. Expense as incurred

C. Record in OCI

D. Defer and amortize

Answer: 

 

7.

All of the following affect operating cash flow under indirect method EXCEPT:

A. Increase in accounts receivable

B. Depreciation expense

C. Dividend paid

D. Increase in accounts payable

Answer: 

 

8.

Which of the following is LEAST relevant in evaluating short-term liquidity?

A. Current ratio

B. Quick ratio

C. Debt-to-equity ratio

D. Operating cash flow ratio

Answer: 

 

9.

All of the following are permanent differences EXCEPT:

A. Municipal bond interest

B. Life insurance proceeds

C. Depreciation timing differences

D. Fines and penalties

Answer: 

 

10.

Which of the following is MOST correct regarding discontinued operations?

A. Reported gross of tax

B. Included in OCI

C. Reported net of tax

D. Treated as extraordinary

Answer: 

 

11.

All of the following are included in Cash Equivalents EXCEPT:

A. 3-month Treasury bill

B. Demand deposit

C. 6-month term deposit

D. Commercial paper maturing in 60 days

Answer: 

 

12.

Which of the following is LEAST appropriate when amortizing bond discount?

A. Use effective interest method

B. Increase interest expense

C. Decrease carrying value over time

D. Increase carrying value toward face

Answer: 

 

13.

All of the following increase ROE EXCEPT:

A. Higher leverage with same income

B. Increased net income

C. Increase equity without income change

D. Share buyback

Answer: 

 

14.

Which of the following is the MOST correct statement about valuation allowance?

A. Recorded when realization is remote

B. Reduces Deferred Tax Liability

C. Reduces Deferred Tax Asset

D. Recorded in OCI

Answer: 

 

15.

All of the following reduce retained earnings EXCEPT:

A. Dividends

B. Net loss

C. OCI loss

D. Share issuance

Answer: 

 

16.

Which of the following is LEAST appropriate in applying Lower of Cost or Market?

A. Market ceiling equals NRV

B. Floor equals NRV minus normal profit

C. Replacement cost defines market

D. Reversal allowed if value recovers

Answer: 

 

17.

All of the following are characteristics of Operating Lease under ASC 842 EXCEPT:

A. Single lease expense pattern

B. ROU asset recorded

C. Lease liability recorded

D. Interest expense shown separately

Answer: 

 

18.

Which of the following is MOST correct regarding financial capital maintenance?

A. Focuses on physical output

B. Profit equals increase in net assets

C. Ignores equity

D. Based on replacement cost

Answer: 

 

19.

All of the following increase Debt-to-Equity ratio EXCEPT:

A. Issuing bonds

B. Recording net loss

C. Repurchasing shares

D. Issuing common stock

Answer: 

 

20.

Which of the following is LEAST appropriate when accounting for warranty liabilities?

A. Recognize if probable

B. Estimate reasonably

C. Recognize when paid

D. Record as expense in sale period

Answer: 

 

21.

All of the following create Deferred Tax Assets EXCEPT:

A. Warranty accrual

B. Litigation accrual

C. Revenue taxed before book recognition

D. Accelerated tax depreciation

Answer: 

 

22.

Which of the following is MOST correct about factoring without recourse?

A. Record liability

B. Treat as secured borrowing

C. Recognize sale and possible loss

D. Defer revenue

Answer: 

 

23.

All of the following affect Gross Profit EXCEPT:

A. Sales

B. COGS

C. Interest expense

D. Inventory write-down

Answer: 

 

24.

Which of the following is LEAST appropriate regarding impairment losses?

A. Report in income statement

B. Reverse for assets held for use

C. Recognize when not recoverable

D. Measure using fair value

Answer: 

 

25.

All of the following are financing activities EXCEPT:

A. Debt issuance

B. Dividend payment

C. Share repurchase

D. Purchase of equipment

Answer: 

 

26.

Which of the following is MOST correct regarding OCI?

A. Included in retained earnings directly

B. Accumulated in AOCI

C. Ignored in equity

D. Included in operating income

Answer: 

 

27.

All of the following reduce current ratio EXCEPT:

A. Paying accounts payable

B. Purchasing inventory with cash

C. Recording net income

D. Short-term borrowing

Answer: 

 

28.

Which of the following is LEAST appropriate for evaluating solvency?

A. Debt ratio

B. Times interest earned

C. Current ratio

D. Debt-to-equity

Answer: 

 

29.

All of the following are temporary differences EXCEPT:

A. Installment sale timing

B. Depreciation differences

C. Municipal bond interest

D. Warranty accrual

Answer: 

 

30.

Which of the following is MOST correct about comprehensive income?

A. Equals retained earnings

B. Includes net income and OCI

C. Includes only unrealized gains

D. Excludes discontinued operations

Answer: 

 

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MCQ questions on Domain 1 to 3CISA certificate exam

Here are  Exam-Level MCQs from CISA Domains 1–3:

Domain 1: Information System Auditing Process

Domain 2: Governance & Management of IT

Domain 3: Information Systems Acquisition, Development & Implementation

(Designed at difficulty level similar to ISACA’s Certified Information Systems Auditor exam style.)

Section A...

🔹 DOMAIN 1 – Information System Auditing Process

Q1.

During an IS audit, the MOST reliable evidence to support a finding related to unauthorized access would be:

A. Written management representation

B. System-generated access logs obtained by the auditor

C. Inquiry with system administrator

D. Internal policy document

Answer: 

Q2.

An IS auditor uses statistical sampling. Which situation MOST justifies using attribute sampling?

A. Estimating average transaction value

B. Testing effectiveness of approval controls

C. Predicting future revenue

D. Performing root cause analysis

Answer: 

Q3.

While planning an audit, the PRIMARY objective of a risk assessment is to:

A. Eliminate audit risk

B. Determine sample size

C. Allocate audit resources to high-risk areas

D. Detect fraud

Answer: 

Q4.

Which of the following would provide the STRONGEST evidence of control effectiveness?

A. Walkthrough of process

B. Observation of one transaction

C. Reperformance of control by auditor

D. Management inquiry

Answer: 

Q5.

An IS auditor discovers a control weakness but determines compensating controls exist. The BEST course of action is to:

A. Ignore the weakness

B. Report weakness without considering compensating control

C. Evaluate effectiveness of compensating control

D. Immediately escalate to board

Answer

🔹 DOMAIN 2 – Governance & Management of IT

Q6.

The PRIMARY responsibility for IT governance rests with:

A. CIO

B. IT Steering Committee

C. Board of Directors

D. IT Security Manager

Answer:

Q7.

Which metric BEST indicates IT alignment with business strategy?

A. Number of servers deployed

B. Percentage of IT projects meeting business objectives

C. Help desk response time

D. Number of IT staff certified

Answer:

Q8.

An organization adopts COBIT. The PRIMARY benefit is:

A. Detailed configuration standards

B. Alignment between IT goals and business goals

C. Replacement of IT staff

D. Elimination of IT risk

Answer:

Q9.

In enterprise risk management (ERM), risk appetite is BEST defined as:

A. Maximum loss before bankruptcy

B. Level of risk organization is willing to accept

C. Amount of insured risk

D. Risk eliminated via controls

Answer: 

Q10.

The MOST important success factor for implementing IT performance metrics is:

A. Advanced analytics tools

B. Top management support

C. External consultants

D. Complex KPIs

Answer: 

🔹 DOMAIN 3 – IS Acquisition, Development & Implementation

Q11.

During system development, segregation of duties is MOST critical between:

A. Programmer and system analyst

B. Developer and user

C. Developer and production migration authority

D. DBA and network admin

Answer: 

Q12.

In Agile development, the GREATEST audit concern is:

A. Excessive documentation

B. Lack of formal approvals

C. Reduced user involvement

D. Waterfall sequencing

Answer

Q13.

User Acceptance Testing (UAT) primarily ensures that:

A. Code is optimized

B. Security vulnerabilities are eliminated

C. System meets business requirements

D. Hardware capacity is adequate

Answer: 

Q14.

A post-implementation review should be conducted PRIMARILY to:

A. Approve project budget

B. Evaluate whether expected benefits were realized

C. Replace project manager

D. Restart development

Answer: 

Q15.

Which control BEST ensures integrity of data during system conversion?

A. Parallel run reconciliation

B. Firewall configuration

C. Antivirus software

D. Encryption key rotation

Answer: 

Section B 

Here Exam-Level MCQs from CISA Domains 1–3 (Audit Process, IT Governance, IS Acquisition/Development).

(Standard aligned with ISACA – Certified Information Systems Auditor)

Q1. (All of the following EXCEPT)

During audit planning, all of the following are PRIMARY objectives of risk assessment EXCEPT:

A. Prioritizing audit areas

B. Determining control reliance strategy

C. Eliminating inherent risk

D. Allocating audit resources

Answer: 

Q2. (MOST correct)

An IS auditor relying on automated controls should FIRST:

A. Test application controls

B. Verify management oversight

C. Evaluate general IT controls

D. Increase sample size

Answer:

Q3. (LEAST relevant)

While auditing IT governance structure, which is LEAST relevant?

A. Board-approved IT strategy

B. IT steering committee charter

C. Network router configuration

D. Defined IT KPIs

Answer: 

Q4. (NEITHER/NOR)

Which scenario indicates NEITHER effective governance NOR proper risk management?

A. IT aligned with business goals but no formal risk register

B. Formal risk register exists but not reviewed by board

C. Documented policies and active monitoring

D. Board approves IT investments based on ROI

Answer: 

Q5. (MOST appropriate action)

An auditor identifies control deficiency but impact is low and compensating controls exist. MOST appropriate action?

A. Issue qualified opinion

B. Ignore deficiency

C. Evaluate compensating controls before reporting

D. Escalate to regulator

Answer: 

Q6. (All EXCEPT)

Effective IT governance ensures all of the following EXCEPT:

A. Strategic alignment

B. Value delivery

C. Complete elimination of IT risk

D. Performance measurement

Answer: 

Q7. (MOST critical)

In Agile implementation, the MOST critical audit risk is:

A. Continuous integration

B. Reduced documentation of approvals

C. Frequent releases

D. Daily stand-up meetings

Answer: 

Q8. (LEAST likely evidence)

Which provides the LEAST persuasive audit evidence?

A. Auditor reperformance

B. System logs extracted by auditor

C. Management oral representation

D. Independent confirmation

Answer: 

Q9. (MOST correct)

When using CAATs, the PRIMARY risk is:

A. Auditor independence loss

B. Data integrity compromise

C. Overreliance on manual testing

D. Excessive documentation

Answer: 

Q10. (All EXCEPT)

During system acquisition, vendor evaluation should include all EXCEPT:

A. Financial stability

B. Source code escrow

C. Developer’s personal social media activity

D. Security compliance certifications

Answer: 

Q11. (MOST effective control)

To prevent unauthorized program migration to production, MOST effective control is:

A. Periodic management review

B. Access logging

C. Segregation between development and migration authority

D. Post-implementation review

Answer: 

Q12. (NEITHER/NOR)

Which situation reflects NEITHER proper change management NOR effective control?

A. Emergency changes documented after implementation

B. Formal approval but no testing

C. Testing and approval documented

D. Segregated migration access

Answer: 

Q13. (LEAST relevant metric)

Which metric is LEAST relevant to measure IT strategic alignment?

A. % IT projects meeting business objectives

B. ROI on IT investments

C. Server CPU utilization rate

D. Balanced scorecard metrics

Answer: 

Q14. (MOST appropriate sampling)

For testing presence of approval signatures, MOST appropriate sampling method:

A. Discovery sampling

B. Attribute sampling

C. Variable sampling

D. Judgmental projection

Answer: 

Q15. (All EXCEPT)

Post-implementation review evaluates all EXCEPT:

A. Benefit realization

B. Budget variance

C. User satisfaction

D. Future hardware depreciation

Answer: 

Q16. (MOST significant risk)

If GITCs are weak, the MOST significant audit impact is:

A. Increased inherent risk

B. Inability to rely on application controls

C. Reduced sampling requirement

D. Improved compliance

Answer: 

Q17. (LEAST effective compensating control)

Which is LEAST effective as compensating control for lack of segregation?

A. Independent review of logs

B. Mandatory vacation policy

C. Dual authorization

D. Same individual reviewing own work

Answer: 

Q18. (MOST correct)

Risk appetite is BEST approved by:

A. CIO

B. Risk manager

C. Board of Directors

D. Internal audit

Answer: 

Q19. (All EXCEPT)

Effective audit documentation should:

A. Support conclusions

B. Be sufficient for re-performance

C. Replace management responsibility

D. Demonstrate scope and methodology

Answer: 

Q20. (MOST appropriate FIRST step)

If an auditor detects potential fraud during SDLC review, FIRST step:

A. Inform media

B. Expand audit procedures and gather evidence

C. Accuse developer

D. Immediately terminate project

Answer: 

⚠ Difficulty Note

These questions test:

·         Control interdependencies

·         Governance accountability

·         Audit evidence hierarchy

·         GITC reliance logic

·         SDLC risk layering

·         Risk appetite vs tolerance distinction

Section C...

Here are 20 Case-Based Integrated MCQs combining:

·         Domain 1: IS Audit Process

·         Domain 2: IT Governance & Risk Management

·         Domain 3: SDLC / Acquisition / Implementation

(Aligned with exam logic of ISACA – Certified Information Systems Auditor)

Each case integrates governance + audit + SDLC risks like real CISA scenarios.

🔥 20 Integrated Case-Based MCQs

CASE 1 – ERP Implementation Without Board Oversight

A company implements a new ERP system. The CIO approved the project without board review. Post-implementation, cost overruns are 40%.

Q1.

The MOST significant governance weakness is:

A. Poor cost estimation

B. Lack of board-level IT investment oversight

C. Weak user training

D. Ineffective UAT

Answer: 

Q2.

The IS auditor’s FIRST step should be to:

A. Review source code

B. Evaluate IT governance structure

C. Test application controls

D. Increase sample size

Answer: 

CASE 2 – Weak GITCs in Agile Environment

An organization uses Agile. Developers have production access. No formal change approvals exist.

Q3.

The GREATEST audit risk is:

A. Sprint backlog mismanagement

B. Lack of documentation

C. Unauthorized changes in production

D. Delayed releases

Answer: 

Q4.

MOST effective control improvement:

A. Daily stand-up meetings

B. Automated deployment with segregation controls

C. More user stories

D. Increased velocity tracking

Answer: 

CASE 3 – Risk Register Exists but Not Reviewed

Risk register is maintained but not reviewed by board or steering committee.

Q5.

This situation indicates:

A. Strong ERM

B. Operational efficiency

C. Weak governance oversight

D. Effective monitoring

Answer: 

Q6.

The LEAST relevant audit procedure would be:

A. Reviewing board minutes

B. Testing risk mitigation controls

C. Evaluating firewall configuration

D. Assessing risk escalation process

Answer: 

CASE 4 – Vendor-Based Cloud Migration

Cloud vendor selected without due diligence. No SLA performance metrics defined.

Q7.

MOST critical SDLC weakness:

A. Lack of parallel testing

B. Inadequate vendor risk assessment

C. Poor password policy

D. Missing antivirus

Answer: 

Q8.

PRIMARY governance failure:

A. Weak help desk

B. Absence of formal IT investment evaluation

C. Incomplete user manual

D. Excessive documentation

Answer: 

CASE 5 – Post-Implementation Review Ignored

System implemented successfully, but no post-implementation review conducted.

Q9.

The MOST important objective missed is:

A. Testing controls

B. Benefit realization assessment

C. Budget approval

D. Coding review

Answer: 

Q10.

Which is LEAST likely impact?

A. Unidentified control gaps

B. Unrealized ROI

C. Increased inherent risk

D. Improved governance transparency

Answer: 

CASE 6 – Segregation Conflict in SDLC

Developer develops, tests, and migrates code.

Q11.

The BEST compensating control would be:

A. Developer self-review

B. Independent log review of migrations

C. Faster deployment

D. Increased salary

Answer: 

Q12.

If GITCs are ineffective, auditor should:

A. Rely on application controls

B. Reduce testing

C. Expand substantive testing

D. Issue immediate adverse opinion

Answer: 

CASE 7 – IT Strategy Misaligned

IT projects approved but not linked to business strategy.

Q13.

MOST appropriate audit focus:

A. Network diagrams

B. Strategic alignment framework

C. Patch management logs

D. Source code review

Answer: 

Q14.

Which metric BEST demonstrates alignment?

A. Number of servers

B. % Projects achieving business objectives

C. Help desk tickets

D. Developer certifications

Answer: 

CASE 8 – Emergency Changes Frequently Occur

Emergency fixes implemented without testing; documentation updated later.

Q15.

The GREATEST risk is:

A. Faster service delivery

B. Unauthorized system instability

C. Improved flexibility

D. Reduced cost

Answer: 

Q16.

MOST appropriate audit recommendation:

A. Ban emergency changes

B. Implement retrospective approval and independent review

C. Eliminate Agile

D. Increase sprint length

Answer: 

CASE 9 – CAATs Used in Audit

Auditor extracts production data using CAATs but does not verify completeness.

Q17.

PRIMARY audit risk:

A. Sampling error

B. Data integrity compromise

C. Increased audit cost

D. Governance failure

Answer: 

Q18.

MOST reliable validation method:

A. Management representation

B. Hash total reconciliation

C. Verbal confirmation

D. Screenshot evidence

Answer: 

CASE 10 – Risk Appetite Not Defined

Company undertakes high-risk digital transformation but no defined risk appetite.

Q19.

This reflects weakness in:

A. SDLC documentation

B. IT governance framework

C. Antivirus control

D. Data backup policy

Answer: 

Q20.

Risk appetite should be approved by:

A. CIO

B. Project manager

C. Board of Directors

D. Internal auditor

Answer: 

🎯 Concepts Integrated in These Cases

✔ Governance oversight failures

✔ Board accountability

✔ Risk appetite vs tolerance

✔ GITC reliance

✔ SDLC segregation

✔ Vendor risk

✔ Post-implementation review

✔ CAAT data validation

✔ Strategic alignment metrics

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MCQ questions on Technology and Data Analytics

Here are 30 MCQ Questions with Answers from US CMA – Technology & Analytics / Internal Controls / Data & BI Topics.

 

1. Big Data is best characterized by which combination?

A. Volume, Value, Verification

B. Volume, Velocity, Variety

C. Validity, Variance, Value

D. Volume, Visualization, Version

✅ Answer: 

(Big Data = 3Vs: Volume, Velocity, Variety)

 

2. Data Mining primarily involves:

A. Storing historical data

B. Extracting useful patterns from large datasets

C. Deleting redundant data

D. Creating financial statements

✅ Answer: 

 

3. A Data Warehouse is MOST appropriately described as:

A. Real-time transaction database

B. Department-specific database

C. Centralized repository of integrated historical data

D. Temporary data storage system

✅ Answer: 

 

4. A Data Mart differs from a Data Warehouse because it:

A. Stores more data

B. Is department-focused

C. Is external to organization

D. Is used only for backup

✅ Answer: 

 

5. Data Integration refers to:

A. Data deletion process

B. Combining data from multiple sources into unified view

C. Data encryption

D. Data compression

✅ Answer: 

 

6. Which tool is MOST suitable for trend analysis over time?

A. Pie chart

B. Histogram

C. Line chart

D. Scatter plot

✅ Answer: 

 

7. A Pie Chart is BEST used when:

A. Showing trends

B. Showing correlation

C. Showing proportion of categories

D. Showing distribution frequency

✅ Answer: 

 

8. Histogram differs from Bar Chart because histogram:

A. Has gaps between bars

B. Represents continuous data

C. Shows percentages only

D. Is used only for time series

✅ Answer: 

 

9. Heat Map is MOST useful to:

A. Display distribution of temperature only

B. Highlight intensity variations across dataset

C. Replace regression model

D. Calculate averages

✅ Answer: 

 

10. Regression model is primarily used to:

A. Classify data

B. Predict dependent variable based on independent variable

C. Delete outliers

D. Segment customers

✅ Answer: 

 

11. Cluster Sampling means:

A. Dividing population into homogeneous groups

B. Selecting every nth item

C. Dividing population into clusters and randomly selecting clusters

D. Selecting only high-value items

✅ Answer: 

 

12. Stratified Sampling requires:

A. Random grouping

B. Homogeneous subgroups (strata) before sampling

C. Equal probability selection only

D. Selection based on judgment

✅ Answer: 

 

13. Business Intelligence (BI) primarily helps management to:

A. Replace ERP

B. Make data-driven decisions

C. Encrypt databases

D. Eliminate internal controls

✅ Answer: 

Example: Dashboard showing sales by region.

 

14. Machine Learning is BEST described as:

A. Manual programming of rules

B. Systems learning patterns from data without explicit programming

C. Spreadsheet automation

D. Data warehousing

✅ Answer: 

Example: Fraud detection model.

 

15. Artificial Intelligence differs from Machine Learning because AI:

A. Is subset of ML

B. Includes broader goal of simulating human intelligence

C. Uses only regression

D. Does not use data

✅ Answer: 

 

16. A Hot Site in disaster recovery is:

A. Empty office space

B. Fully equipped backup facility ready for immediate use

C. Backup taken weekly

D. Cloud storage only

✅ Answer: 

 

17. Warm Site includes:

A. No equipment

B. Fully operational system

C. Basic infrastructure with partial configuration

D. Only paper documents

✅ Answer: 

 

18. Cold Site is:

A. Fully operational

B. Basic infrastructure without equipment

C. Cloud-only backup

D. AI-based recovery

✅ Answer: 

 

19. Disaster Recovery Plan (DRP) focuses on:

A. Long-term strategy

B. Restoring IT systems after disruption

C. Marketing continuity

D. Budget forecasting

✅ Answer: 

 

20. Business Continuity Plan (BCP) is broader than DRP because it covers:

A. Only IT recovery

B. Entire business operations continuity

C. Only financial reporting

D. Only insurance claims

✅ Answer: 

 

21. Which is an example of Data Visualization?

A. SQL Query

B. Dashboard with KPI charts

C. Data entry form

D. Backup log

✅ Answer: 

 

22. In Big Data analytics, Velocity refers to:

A. Data accuracy

B. Speed of data generation and processing

C. Storage size

D. Data format

✅ Answer: 

 

23. Which technique is MOST useful for fraud detection?

A. Regression

B. Machine Learning classification

C. Pie chart

D. Cluster sampling

✅ Answer: 

 

24. Which of the following is NOT a benefit of Data Warehouse?

A. Improved reporting

B. Historical analysis

C. Real-time transaction processing

D. Integrated data

✅ Answer: 

 

25. Stratified sampling is preferred over simple random sampling when:

A. Population is homogeneous

B. Population has distinct subgroups

C. Cost is zero

D. Data is continuous

✅ Answer: 

 

26. A Scatter Plot is mainly used to:

A. Show proportions

B. Show frequency

C. Show relationship between two variables

D. Show categories

✅ Answer: 

 

27. Data Mining technique used to group similar customers is:

A. Regression

B. Classification

C. Clustering

D. Sampling

✅ Answer: 

 

28. Which of the following is MOST correct regarding Business Intelligence?

A. It predicts automatically without data

B. It transforms raw data into actionable insights

C. It replaces internal audit

D. It eliminates fraud risk

✅ Answer: 

 

29. In Disaster Recovery, RTO (Recovery Time Objective) refers to:

A. Maximum acceptable downtime

B. Data accuracy

C. Backup frequency

D. Revenue target

✅ Answer: 

 

30. Which visualization is MOST suitable for comparing categories?

A. Line Chart

B. Pie Chart

C. Bar Chart

D. Heat Map

✅ Answer: 

 

Here are 30 Case-Based MCQs (Integrated, Analytical & Exam-Level) from US CMA – Data Analytics, BI, Big Data, DRP/BCP, Sampling & Visualization.

 

🔥 CASE-BASED MCQs 

1.

A manufacturing company integrates sales, production, and customer complaint databases into a centralized system for historical trend analysis. However, operational systems slow down during peak hours.

Which is the MOST appropriate solution?

A. Replace ERP

B. Implement Data Mart

C. Implement Data Warehouse separate from OLTP

D. Use Pie Charts

✅ Answer: 

 

2.

An auditor selects 5 branches randomly out of 60 and audits all transactions within selected branches.

This sampling method is:

A. Stratified

B. Cluster

C. Systematic

D. Judgmental

✅ Answer: 

 

3.

A company divides customers into high, medium, and low revenue groups and randomly samples from each group proportionately.

This ensures:

A. Reduced bias through stratification

B. Elimination of sampling risk

C. Cluster-based efficiency

D. Big data integration

✅ Answer: 

 

4.

An AI system detects unusual vendor payments by continuously learning from historical fraud cases without explicit reprogramming.

This is an example of:

A. Data Mining

B. Machine Learning

C. Business Intelligence

D. Data Integration

✅ Answer: 

 

5.

During disaster recovery testing, management discovers IT systems can be restored in 8 hours, while business operations require restoration within 4 hours.

Which metric is violated?

A. RPO

B. RTO

C. SLA

D. KPI

✅ Answer: 

 

6.

A company maintains infrastructure but must install software and restore backups after disaster. Recovery time: 3–4 days.

Type of site?

A. Hot

B. Cold

C. Warm

D. Mirror

✅ Answer: 

 

7.

A dashboard displays monthly sales trends over 5 years to detect seasonality.

Best visualization?

A. Pie Chart

B. Histogram

C. Line Chart

D. Heat Map

✅ Answer: 

 

8.

Management wants to examine correlation between advertising expense and sales revenue.

Best analytical tool?

A. Bar Chart

B. Regression Model

C. Pie Chart

D. Cluster Sampling

✅ Answer: 

 

9.

An organization stores terabytes of social media feedback generated every second.

Primary Big Data challenge here is:

A. Variety

B. Velocity

C. Volume

D. Validity

✅ Answer: 

 

10.

An auditor uses analytics to identify duplicate payments by searching identical invoice numbers.

This is:

A. Predictive analytics

B. Descriptive analytics

C. Data mining rule detection

D. Regression

✅ Answer: 

 

11.

A histogram shows frequency of machine downtime hours. Bars touch each other.

Why?

A. It represents categorical data

B. Continuous data intervals

C. Stratified data

D. Percentage breakdown

✅ Answer: 

 

12.

Management wants a visual showing profitability by region as color intensity on a map.

Best option?

A. Line chart

B. Heat map

C. Pie chart

D. Scatter plot

✅ Answer: 

 

13.

Data from multiple subsidiaries use different currency formats. Before loading into warehouse, company standardizes format.

This step is:

A. Data mining

B. Data cleansing/integration

C. AI modeling

D. BI reporting

✅ Answer: 

 

14.

A predictive fraud model incorrectly flags many legitimate transactions as fraud.

This indicates high:

A. Type II error

B. False positives

C. Regression bias

D. Sampling frame error

✅ Answer: 

 

15.

Which scenario BEST distinguishes BI from AI?

A. Dashboard showing KPI vs AI chatbot resolving customer queries

B. Data warehouse vs data mart

C. Pie chart vs histogram

D. Sampling vs clustering

✅ Answer: 

 

16.

A company uses clustering to segment customers based on buying patterns.

Primary objective?

A. Predict sales precisely

B. Group similar observations

C. Test hypothesis

D. Eliminate fraud

✅ Answer: 

 

17.

A cold site is selected to reduce cost. Which is the BIGGEST risk?

A. Data redundancy

B. Long recovery time

C. Data duplication

D. Overfitting

✅ Answer: 

 

18.

If RPO is 2 hours, organization must:

A. Restore system in 2 hours

B. Ensure no more than 2 hours of data loss

C. Resume operations in 2 hours

D. Backup every 24 hours

✅ Answer: 

 

19.

A regression output shows R² = 0.85.

This implies:

A. 85% of dependent variable variance explained by model

B. 85% prediction accuracy

C. 85% sampling reliability

D. 85% fraud probability

✅ Answer: 

 

20.

A company wants department-level reporting instead of enterprise-wide analysis.

Best solution?

A. Data Warehouse

B. Data Mart

C. Big Data Lake

D. AI Engine

✅ Answer: 

 

21.

Which visualization is LEAST appropriate for showing trend over time?

A. Line chart

B. Scatter plot with time axis

C. Pie chart

D. Area chart

✅ Answer: 

 

22.

An ML credit model improves accuracy after processing more historical data.

This reflects:

A. Data integration

B. Self-learning capability

C. Regression assumption

D. Sampling adjustment

✅ Answer: 

 

23.

Auditor divides 10,000 invoices into groups by region and selects proportionately.

Sampling advantage?

A. Reduced variance

B. Faster processing

C. Eliminates bias

D. No sampling risk

✅ Answer: 

 

24.

A DRP focuses primarily on:

A. Maintaining competitive advantage

B. Restoring IT systems

C. Revenue growth

D. Data mining

✅ Answer: 

 

25.

Which scenario BEST illustrates AI?

A. Static dashboard

B. Spreadsheet formula

C. Voice-based virtual assistant resolving queries

D. SQL report

✅ Answer: 

 

26.

Data warehouse differs from OLTP because it is:

A. Optimized for transactions

B. Normalized

C. Optimized for analysis & queries

D. Real-time processing

✅ Answer: 

 

27.

Heat map detecting high-risk vendors is example of:

A. Data visualization aiding risk assessment

B. Machine learning

C. Cluster sampling

D. Regression

✅ Answer: 

 

28.

A company uses systematic sampling selecting every 50th invoice. Major risk?

A. Pattern bias

B. High cost

C. Overfitting

D. Data cleansing issue

✅ Answer: 

 

29.

If business operations continue but IT systems fail, which plan activates first?

A. BCP

B. DRP

C. AI response

D. Data warehouse

✅ Answer: 

 

30.

Which situation MOST likely requires predictive analytics?

A. Reporting last year’s sales

B. Explaining why sales declined

C. Forecasting next quarter demand

D. Summarizing revenue by region

✅ Answer: 

 

. Here are 20 Integrated Multi-Layer Caselets combining

Governance + IT Controls + Data Analytics + DRP + BCP + Sampling + AI/BI

(US CMA Exam Level – Highly Analytical & Integrated)

Each case has 1 MCQ with 4 options.

 

🔥 INTEGRATED MULTI-LAYER CASELETS

 

Caselet 1 – Data Warehouse Governance Failure

ABC Ltd. implemented a centralized data warehouse. Internal audit found inconsistent revenue data across dashboards because regional systems use different revenue recognition rules. Board audit committee is concerned about reporting integrity.

What should management implement FIRST?

A. Machine learning fraud model

B. Strong data governance framework & standardized data definitions

C. Cold site backup

D. Cluster sampling

✅ Answer: 

 

Caselet 2 – Disaster Recovery vs Business Continuity

A flood shuts down the company’s primary data center. IT systems are restored in 6 hours at a hot site, but customer service operations resume only after 3 days.

Which statement is MOST correct?

A. DRP failed

B. BCP failed

C. Both DRP and BCP failed

D. Sampling risk caused delay

✅ Answer: 

(DRP = IT restored. BCP = operations continuity failed.)

 

Caselet 3 – Fraud Analytics & False Positives

An AI-based fraud detection system flags 30% of legitimate transactions as suspicious. Finance team complains about operational disruption.

Primary issue?

A. Overfitting

B. High false positive rate

C. Sampling bias

D. Weak governance

✅ Answer: 

 

Caselet 4 – IT General Controls Weakness

During audit, it was noted that developers have direct access to production systems. Simultaneously, the company uses BI dashboards for strategic decisions.

Biggest risk?

A. Visualization risk

B. Segregation of duties violation

C. Data warehouse failure

D. Cold site inadequacy

✅ Answer: 

 

Caselet 5 – Sampling Strategy in Audit Analytics

Internal audit divides procurement transactions by vendor size and samples proportionately.

Why is this MOST appropriate?

A. Eliminates audit risk

B. Ensures representation across risk categories

C. Reduces big data velocity

D. Improves regression accuracy

✅ Answer: 

(Stratified sampling for risk-based audit.)

 

Caselet 6 – Data Integration Risk

ERP, CRM, and HR systems feed into warehouse. HR data includes outdated employee IDs causing duplication.

Primary control missing?

A. AI monitoring

B. Data cleansing & validation controls

C. DRP testing

D. Regression analysis

✅ Answer: 

 

Caselet 7 – Heat Map & Governance Oversight

Board reviews heat map showing high-risk vendor concentration in one region.

Best governance response?

A. Ignore visualization

B. Initiate targeted internal audit review

C. Replace warehouse

D. Implement cold site

✅ Answer: 

 

Caselet 8 – RPO & Financial Risk

Company’s RPO is 12 hours. Cyberattack results in 18 hours of lost accounting data.

Implication?

A. RTO failure

B. Governance control failure over backup frequency

C. BI system weakness

D. Sampling error

✅ Answer: 

 

Caselet 9 – Predictive Analytics in Budgeting

Management uses regression model to forecast sales but ignores macroeconomic variables, leading to inaccurate budgets.

Root cause?

A. Data warehouse failure

B. Omitted variable bias

C. DRP weakness

D. AI malfunction

✅ Answer: 

 

Caselet 10 – Cluster Sampling Risk

Audit selects 4 warehouses randomly and audits all transactions inside them. One high-risk warehouse was not selected.

Main limitation?

A. Lack of stratification

B. Data mining failure

C. BI deficiency

D. Heat map misuse

✅ Answer: 

 

Caselet 11 – Big Data & Velocity Issue

Real-time IoT production sensors generate massive streaming data. System crashes during peak load.

Big Data challenge MOST evident?

A. Variety

B. Volume

C. Velocity

D. Validity

✅ Answer: 

 

Caselet 12 – Governance & AI Ethics

AI credit approval model disproportionately rejects applicants from certain regions.

Board concern relates to:

A. DRP

B. Bias & ethical governance

C. Data mart issue

D. Cluster sampling

✅ Answer: 

 

Caselet 13 – Hot Site Cost vs Risk

CFO wants to downgrade hot site to cold site to reduce cost. Risk committee disagrees.

Strongest argument for hot site?

A. Lower sampling error

B. Faster recovery minimizing financial & reputational loss

C. Better regression output

D. Data visualization improvement

✅ Answer: 

 

Caselet 14 – Business Intelligence Limitation

Dashboard shows declining profit margin but not underlying cause.

This illustrates limitation of:

A. Predictive analytics

B. Descriptive analytics

C. Cluster analysis

D. DRP

✅ Answer: 

 

Caselet 15 – Data Mart Misuse

Marketing creates independent data mart separate from finance warehouse. Revenue figures differ in board report.

Primary governance weakness?

A. Lack of centralized data governance

B. AI failure

C. RPO mismatch

D. Sampling bias

✅ Answer: 

 

Caselet 16 – DRP Testing Failure

Company never tested DRP. During ransomware attack, backup restoration fails.

Best control improvement?

A. Implement regression

B. Conduct periodic DRP simulation testing

C. Introduce BI dashboard

D. Stratified sampling

✅ Answer: 

 

Caselet 17 – Histogram Interpretation Error

Operations manager interprets histogram of defect rates as categorical comparison.

Mistake because histogram represents:

A. Categorical groups

B. Continuous distribution

C. Proportions

D. Time trends

✅ Answer: 

 

Caselet 18 – Regression & Governance

Regression predicts 90% accuracy historically but fails during economic crisis.

Primary lesson?

A. AI is superior

B. Models require periodic recalibration & governance oversight

C. Heat maps are better

D. Sampling removes macro risk

✅ Answer: 

 

Caselet 19 – Business Continuity Planning Gap

Company restored IT systems but supply chain partners were not aligned with continuity plan.

BCP gap relates to:

A. Internal controls only

B. External stakeholder integration

C. Regression accuracy

D. AI bias

✅ Answer: 

 

Caselet 20 – Integrated Risk Scenario

Company uses:

• AI fraud detection

• Data warehouse for reporting

• Hot site backup

However, no board oversight over data governance policies.

Most significant enterprise risk?

A. Technical failure

B. Governance & oversight deficiency

C. Sampling risk

D. Visualization bias

✅ Answer: 

 

🔥 What This Tests in CMA Exam

These caselets integrate:

• Corporate Governance

• IT General Controls

• Data Governance

• AI / BI distinction

• Sampling methods

• Regression interpretation

• DRP vs BCP

• Big Data 3Vs

• Visualization interpretation

 

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