100 QUESTIONS for US CMA Part 1 - All Types - Cost + Financial Accounting (US GAAP)
*Question Type Legend:* MCQ, T/F, FILL, ODD, NEGATIVE, ASSERTION-REASON, NEITHER/NOR
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*PART A - COST MANAGEMENT [Q1-60]*
*Q1 MCQ:* Which of the following is an example of Committed Fixed Cost?
A) Advertising B) Depreciation on factory building C) R&D D) Management training
*Ans: B* - Cannot be avoided in short-run.
*Q2 FILL:* Cost function y = a + bX, 'a' stands for *__ and 'b' for *__.
*Ans:* a= Fixed Cost / Total Fixed Cost, b= Variable cost per unit
*Q3 T/F:* Relevant Range is the range where cost behavior assumptions remain valid.
*Ans:* TRUE
*Q4 MCQ:* High-Low Method: At 1000 units cost $5000, at 2000 units cost $7000. Variable cost per unit?
A) $2 B) $3 C) $5 D) $2.5
*Ans: A - $2* - (7000-5000)/(2000-1000)
*Q5 ODD MAN OUT:* Direct Material, Direct Labour, Factory Rent, Sales Commission
*Ans:* Sales Commission - Period cost, others are Prime Cost/Product cost.
*Q6 NEGATIVE:* Which is NOT a factor of production?
A) Land B) Labour C) Capital D) Profit
*Ans: D - Profit* is reward, not factor. Factors are Land, Labour, Capital, Entrepreneurship.
*Q7 MCQ:* Overcosting of a product results in:
A) Increase in sales B) Cross-subsidization C) Undercosting of other product D) Both B & C
*Ans: D*
*Q8 ASSERTION-REASON:* Assertion: ABC costing is more accurate than volume-based costing. Reason: ABC uses single cost driver.
A) Both true, reason correct explanation B) Both true but reason false C) Assertion true, Reason false D) Both false
*Ans: C* - ABC uses multiple cost drivers.
*Q9 MCQ:* Manufacturing overheads include:
A) Factory supervisor salary B) CEO salary C) Sales commission D) Interest
*Ans: A*
*Q10 T/F:* Operating expenses are product costs.
*Ans: FALSE* - Period costs.
*Q11 FILL:* Cost Pool + ____ = Allocation base.
*Ans:* Cost Driver
*Q12 MCQ:* Opportunity cost is:
A) Recorded in books B) Potential benefit given up C) Sunk cost D) Historical cost
*Ans: B*
*Q13 MCQ:* Sunk cost is:
A) Relevant for decision B) Irrelevant, already incurred C) Future cost D) Variable cost
*Ans: B*
*Q14 NEGATIVE:* Which is NOT an Economic Cost?
A) Explicit + Implicit B) Accounting cost only C) Includes opportunity cost D) Includes normal profit
*Ans: B*
*Q15 MCQ:* Explicit cost vs Implicit cost: Salary paid to owner who could work elsewhere is:
A) Explicit B) Implicit C) Sunk D) Fixed
*Ans: B - Implicit*
*Q16 MCQ:* Short-run period in economics means:
A) All factors variable B) At least one factor fixed C) 1 year D) 6 months
*Ans: B*
*Q17 MCQ:* Relevant Cost for decision making must be:
A) Future, differential, cash flow B) Past cost C) Sunk cost D) Allocated fixed cost
*Ans: A*
*Q18 ODD MAN OUT:* Cost reduction, Cost control, Cost cutting, Cost reporting
*Ans:* Cost reporting - others are cost management objectives. Reduction is permanent, control is keeping within standards.
*Q19 MCQ:* Responsibility of HR/Personnel dept vs Payroll dept:
A) HR hires, Payroll pays B) Both same C) HR pays D) Payroll hires
*Ans: A*
*Q20 MCQ:* Job order costing is suitable for:
A) Oil refinery B) Custom furniture C) Chemicals D) Cement
*Ans: B* - Unique jobs. Process costing for homogeneous mass production.
*Q21 FILL:* Process costing uses ____ report.
*Ans:* Cost of Production Report
*Q22 MCQ:* Operation Excellence = Efficiency + *__ + *__?
A) Effectiveness & Economy B) Profit & Loss C) Cost & Revenue D) None
*Ans: A*
*Q23 MCQ:* Under Variable Costing, fixed MOH is:
A) Product cost B) Period cost C) Part of inventory D) Deferred
*Ans: B*
*Q24 MCQ:* Under Absorption Costing, gross profit = Sales - ?
A) Variable cost B) COGS including fixed MOH C) Contribution D) Prime cost
*Ans: B*
*Q25 MCQ:* Super-variable costing treats ____ as only variable?
A) Direct Material B) Direct Labour C) Overhead D) All
*Ans: A - Only Direct Material is inventoriable*
*Q26 T/F:* Contribution Margin = Sales - Variable Cost, Gross Margin = Sales - COGS.
*Ans:* TRUE
*Q27 MCQ:* If Mark-up on Cost is 25%, Profit on Sales is:
A) 25% B) 20% C) 30% D) 15%
*Ans: B - 20%* - Formula: Profit on Sales = Markup/(1+Markup) = 25/125=20%
*Q28 MCQ:* Cost behavior: y = $5000 + $10X, at 100 units total cost?
A) $6000 B) $5000 C) $1000 D) $10
*Ans: A*
*Q29 MCQ:* Step Fixed Cost example:
A) Supervisor salary when shift increases B) Electricity C) Material D) Commission
*Ans: A*
*Q30 MCQ:* Normal Costing uses:
A) Actual DM, Actual DL, Actual OH B) Actual DM, Actual DL, Budgeted OH rate C) Standard all D) Actual OH only
*Ans: B* - Actual=Actual Costing, Standard=Standard Costing
*Q31 ODD MAN OUT:* Cost Unit, Cost Driver, Cost Object, Cost of Living
*Ans:* Cost of Living - Not costing term.
*Q32 MCQ:* Activity & Activity Cost - In ABC, activity cost is:
A) Direct cost B) Overhead grouped by activity C) Prime cost D) Sunk
*Ans: B*
*Q33 T/F:* Normal spoilage cost is added to good units, abnormal spoilage is loss.
*Ans:* TRUE - Very Important for CMA.
*Q34 MCQ:* Journal: Abnormal spoilage disposition:
A) Dr. COGS B) Dr. Loss - Abnormal Spoilage Cr. WIP C) Dr. FG D) No entry
*Ans: B*
*Q35 FILL:* Theoretical Capacity - Maintenance - holidays = ____ Capacity.
*Ans:* Practical Capacity
*Q36 MCQ:* Raw material procurement documents include:
A) Purchase Requisition, PO, GRN, Invoice B) Only Invoice C) Only PO D) None
*Ans: A*
*Q37 MCQ:* Overapplied overhead means:
A) Actual > Applied B) Applied > Actual C) Equal D) Zero
*Ans: B* - Applied more than actual.
*Q38 MCQ:* Underapplied overhead treatment: If immaterial:
A) Close to COGS B) Prorate to WIP, FG, COGS C) Carry forward D) Ignore
*Ans: A* - If material, prorate.
*Q39 MCQ:* Cost tracing vs Allocation: Direct material is:
A) Traced B) Allocated C) Apportioned D) Reapportioned
*Ans: A - Direct tracing*
*Q40 MCQ:* Apportionment vs Reapportionment:
A) Apportionment primary distribution, Reapportionment secondary B) Same C) Reverse D) None
*Ans: A*
*Q41 T/F:* Prime Cost = Direct Material + Direct Labour.
*Ans:* TRUE - Conversion Cost = DL + MOH
*Q42 MCQ:* Joint Products: Split-off point is:
A) Where joint costs end and separable B) Start of process C) End of process D) None
*Ans: A*
*Q43 MCQ:* Joint cost allocation method NOT allowed under GAAP for inventory?
A) Sales value at split-off B) NRV C) Physical units D) Market value at split-off is allowed, but Constant gross margin NRV is allowed. Which is NOT?
*Ans:* All allowed except arbitrary allocation. GAAP prefers sales value methods.
*Q44 MCQ:* Further processing cost is:
A) Joint cost B) Separable cost after split-off, relevant for sell or process further decision C) Sunk D) Fixed
*Ans: B*
*Q45 FILL:* COGS = Beginning FG + Cost of Goods Manufactured - ____.
*Ans:* Ending FG. COAFS = Beg FG + COGM.
*Q46 MCQ:* Committed vs Discretionary Fixed Cost: Property tax is:
A) Committed B) Discretionary C) Variable D) Semi-variable
*Ans: A* - Discretionary = Advertising, R&D, Training - can be cut.
*Q47 NEGATIVE:* Which is NOT a manufacturing department function?
A) Production planning B) Quality control C) Selling product D) Maintenance
*Ans: C - Selling is non-manufacturing*
*Q48 MCQ:* Skilled vs Unskilled labour: Skilled labour cost is usually:
A) Higher, direct B) Lower C) Period D) Overhead always
*Ans: A*
*Q49 MCQ:* Journal: Material Purchased:
A) Dr. Raw Material Cr. Accounts Payable B) Dr. WIP Cr. RM C) Dr. FG Cr. WIP D) Dr. COGS
*Ans: A*
*Q50 MCQ:* Journal: Wages to WIP:
A) Dr. WIP Cr. Wages Payable B) Dr. RM Cr. Cash C) Dr. COGS Cr. WIP D) Dr. FG
*Ans: A*
*Q51 MCQ:* Journal: WIP to FG:
A) Dr. FG Cr. WIP B) Dr. WIP Cr. FG C) Dr. COGS Cr. FG D) Dr. RM
*Ans: A*
*Q52 MCQ:* Journal: Shipment to Customer:
A) Dr. COGS Cr. FG and Dr. AR Cr. Sales B) Only one entry C) Dr. FG Cr. Sales D) None
*Ans: A - Two entries - one for sale, one for cost*
*Q53 ODD MAN OUT:* Cost Pool, Cost Driver, Cost Tracing, Cost of Goods Sold
*Ans:* COGS is result, others are ABC allocation concepts.
*Q54 ASSERTION-REASON:* A: Undercosting leads to overpricing. R: Cross-subsidization occurs.
A) Both true, R explains A B) A false C) Both false D) A true R false
*Ans: A - If one product undercosted, other overcosted, leads to wrong pricing.*
*Q55 NEITHER/NOR:* Neither Job Costing nor Process Costing uses:
A) DM B) DL C) Standard costing D) Neither uses ____? Trick.
*Ans:* Neither uses selling expense as product cost.
*Q56 MCQ:* Semi-variable cost = Fixed + Variable. Example:
A) Electricity with minimum charge + per unit B) Straight line rent C) Direct material D) Commission only
*Ans: A*
*Q57 T/F:* Cost control is proactive, cost reduction is reactive and permanent.
*Ans:* TRUE - CMA favorite.
*Q58 MCQ:* By-product accounting: Net realizable value of by-product is usually:
A) Deducted from joint cost / COGS B) Added to sales C) Treated as other income D) Both A and C acceptable
*Ans: D*
*Q59 FILL:* At Least one cost is fixed in short-run, All costs are ____ in long-run.
*Ans:* Variable / Avoidable
*Q60 MCQ:* Absorption Costing vs Variable Costing income difference is due to:
A) Fixed MOH in ending inventory B) Variable cost C) Sales D) Prime cost
*Ans: A*
*PART B - FINANCIAL ACCOUNTING US GAAP [Q61-100]*
*Q61 MCQ:* Current Assets are expected to be realized within:
A) 1 year or operating cycle, whichever longer B) 5 years C) 6 months D) Only 1 year
*Ans: A*
*Q62 T/F:* Non-current assets include Property, Plant, Equipment, Intangibles, Long-term investments.
*Ans:* TRUE
*Q63 MCQ:* Feature of Balance Sheet is:
A) Shows financial position at a point in time B) Shows performance over period C) Shows cash flows D) None
*Ans: A*
*Q64 MCQ:* Limitation of Balance Sheet:
A) Assets at historical cost, estimates, omission of human resources B) No limitations C) Only shows cash D) Shows market value
*Ans: A*
*Q65 MCQ:* Income Statement limitation:
A) Estimates, alternative GAAP methods, non-cash items, omission of qualitative factors B) Shows position C) No limitation D) Shows cash
*Ans: A*
*Q66 MCQ:* Other Comprehensive Income includes:
A) Unrealized gain on AFS Debt, Foreign currency translation, Pension adjustments B) Net Income C) Dividend D) Cash
*Ans: A*
*Q67 MCQ:* Reclassification of OCI to Income Statement is called:
A) Recycling B) Amortization C) Realization D) Closing
*Ans: A - e.g., AFS Debt sold*
*Q68 T/F:* Small stock dividend <20-25%, Large stock dividend >25%.
*Ans:* TRUE
*Q69 MCQ:* Small stock dividend recorded at:
A) Fair Value B) Par Value C) No entry D) Book value
*Ans: A - Dr. Retained Earnings Cr. Common Stock & APIC at FV*
*Q70 MCQ:* Large stock dividend recorded at:
A) Par Value B) Fair Value C) Zero D) Market
*Ans: A*
*Q71 MCQ:* Treasury Stock is:
A) Contra Equity, debit balance, reduces equity B) Asset C) Liability D) Gain
*Ans: A*
*Q72 MCQ:* Annual dividend vs Interim dividend:
A) Annual declared after year-end, Interim during year B) Same C) Interim only for pref D) Annual is liability always
*Ans: A*
*Q73 MCQ:* Financial Lease Criteria - At least one:
A) Transfer of ownership, Purchase option reasonably certain, Lease term >=75% of economic life, PV of payments >=90% FV, Specialized asset B) All must meet C) Only one year D) None
*Ans: A - Any ONE of 5 criteria as per ASC 842*
*Q74 ODD MAN OUT:* Trading, HTM, AFS Debt, Equity Method
*Ans:* Equity Method - for significant influence, others are ASC 320 debt categories.
*Q75 MCQ:* Trading Investment unrealized goes to:
A) Net Income B) OCI C) Nowhere D) Equity directly
*Ans: A*
*Q76 MCQ:* HTM Investment is measured at:
A) Amortized Cost B) FV C) Lower of cost or market D) NRV
*Ans: A*
*Q77 MCQ:* AFS Debt Investment unrealized goes to:
A) OCI B) Net Income C) Retained Earnings D) Asset
*Ans: A*
*Q78 MCQ:* Investment in Associate 20-50% uses:
A) Equity Method B) FV-NI C) HTM D) Consolidation
*Ans: A*
*Q79 MCQ:* Investment in Subsidiary >50% uses:
A) Consolidation B) Equity Method in consolidated books C) FV D) Cost
*Ans: A - Consolidation for consolidated FS*
*Q80 T/F:* Goodwill is amortized under US GAAP.
*Ans:* FALSE - Not amortized, tested for impairment only.
*Q81 MCQ:* Goodwill Impairment Test: If Carrying Amount of Reporting Unit > Fair Value, Impairment =
A) Difference capped to goodwill B) Full carrying amount C) Zero D) Fair Value
*Ans: A*
*Q82 MCQ:* Double Declining Balance: Cost $100k, life 5 years, residual $10k. Year 1 Depreciation?
A) $40,000 B) $36,000 C) $20,000 D) $18,000
*Ans: A - 40% x 100k = 40k, residual ignored in DDB*
*Q83 MCQ:* Sum-of-Year-Digit: Life 4 years. Year 1 fraction?
A) 4/10 B) 3/10 C) 1/4 D) 4/5
*Ans: A - SYD = n(n+1)/2 = 10. Year1 = 4/10*
*Q84 MCQ:* Cash Flow from Operations - Direct Method shows:
A) Cash collected from customers, Cash paid to suppliers B) Net Income + Non-cash C) Only Net Income D) None
*Ans: A*
*Q85 MCQ:* Indirect Method starts with:
A) Net Income B) Sales C) Cash D) Gross Profit
*Ans: A*
*Q86 FILL:* CFF = Financing, CFI = Investing, CFO = Operating. C&CE = ____?
*Ans:* Cash & Cash Equivalents - Maturity <=90 days
*Q87 MCQ:* Inter-company transaction elimination: Parent sold goods to Sub with unrealized profit. For consolidation:
A) Eliminate 100% profit B) Eliminate proportional C) No elimination D) Eliminate 50%
*Ans: A - 100% eliminated*
*Q88 MCQ:* Depletion method used for:
A) Wasting assets / Natural resources B) Building C) Patent D) Goodwill
*Ans: A - e.g., Mines, Oil*
*Q89 MCQ:* Amortization of Intangible with finite life:
A) Over useful life, usually straight-line B) Not amortized C) DDB D) SYD only
*Ans: A*
*Q90 T/F:* Long-lived assets are tested for impairment when indicators exist: Recoverability test (Carrying Amount vs Undiscounted Future Cash Flows) then measure impairment.
*Ans:* TRUE - Two-step for long-lived assets other than goodwill.
*Q91 MCQ:* Which is Wasting Asset?
A) Patent B) Timberland C) Building D) Goodwill
*Ans: B*
*Q92 NEGATIVE:* Which is NOT part of CFO under indirect method?
A) Depreciation added back B) Gain on sale of equipment deducted C) Purchase of equipment D) Increase in Accounts Payable added
*Ans: C - Purchase of equipment is CFI*
*Q93 ASSERTION-REASON:* A: Treasury stock reduces total equity. R: Treasury stock is contra-equity.
A) Both true, R explains A B) Both false C) A false D) R false
*Ans: A*
*Q94 MCQ:* Small & Large Stock Dividend difference impacts:
A) Retained Earnings amount B) Total equity C) Cash D) Liability
*Ans: A - Total equity remains same for both, only Retained Earnings reduction differs.*
*Q95 FILL:* Premium on bonds for HTM debt is amortized using ____ method.
*Ans:* Effective Interest Rate Method
*Q96 MCQ:* Trading Debt purchased $50k, FV year-end $55k. Journal:
A) Dr. Investment $5k Cr. Unrealized Gain - Income $5k B) Dr. OCI Cr. Investment C) No entry D) Dr. Cash
*Ans: A*
*Q97 ODD MAN OUT:* Current Assets, Non-Current Assets, Fixed Assets, Revenue
*Ans:* Revenue - others are Balance Sheet items.
*Q98 MCQ:* Features of Income Statement: Shows:
A) Profitability over period, Matching principle B) Position at point in time C) Cash only D) Equity only
*Ans: A*
*Q99 MCQ:* Presentation & Disclosure requires:
A) Comparative statements, Consistency, Full disclosure B) Only one year C) No notes D) Only cash basis
*Ans: A*
*Q100 FINAL MASTER MCQ - Scale 20:*
GMSI Inc. has: Beginning Raw Material $10k, Purchase $50k, Ending RM $5k, Direct Labour $30k, MOH $20k, Beginning WIP $8k, Ending WIP $12k, Beginning FG $15k, Ending FG $10k. What is COGS?
A) $100k B) $101k C) $106k D) $96k
*Ans: B - $101k*
*Exp:* RM used = 10+50-5=55k. Total Manufacturing Cost = 55+30+20=105k. COGM = Beg WIP 8 +105 - End WIP 12 =101k. COGS = Beg FG 15 +101 - End FG 10 =106k? Wait recalc: 15+101=116-10=106k. Correct Ans = *C $106k*. _CMA Trap - multi-step._
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