Question Answers on basic concepts on financial accounting, Cost Accounting, economics etc

100 Q&A covering the topic based on *US CMA Part 1 Section A + ACCA MA/FMA. Short, exam-focused

*A. Basic Financial Accounting Concepts - Q1 to Q15*

1. *Q*: What is the accounting equation? *A*: Assets = Liabilities + Equity. Foundation of double entry.

2. *Q*: What is accrual basis vs cash basis? *A*: Accrual records revenue/expense when earned/incurred. Cash when cash moves.

3. *Q*: What is matching principle? *A*: Expenses matched to revenues of same period.

4. *Q*: What is conservatism principle? *A*: Recognize losses early, gains only when realized.

5. *Q*: What are 4 financial statements? *A*: Income Statement, Balance Sheet, Cash Flow, Statement of Equity.

6. *Q*: Debit vs Credit rule for assets? *A*: Assets increase with Debit, decrease with Credit.

7. *Q*: What is contra account? *A*: Account with opposite normal balance. E.g. Accumulated Depreciation.

8. *Q*: What is revenue recognition 5-step model? *A*: Identify contract → performance obligations → price → allocate → recognize.

9. *Q*: What is materiality concept? *A*: Ignore immaterial items if it won’t affect decisions.

10. *Q*: What is going concern assumption? *A*: Business will continue operations, not liquidate soon.

11. *Q*: What is consistency principle? *A*: Use same accounting methods period to period.

12. *Q*: What is entity concept? *A*: Business separate from owner.

13. *Q*: What is historical cost principle? *A*: Record assets at original cost, not market value.

14. *Q*: What is trial balance purpose? *A*: Check arithmetic accuracy of ledger postings.

15. *Q*: What is adjusting entry for prepaid rent? *A*: Dr Rent Expense, Cr Prepaid Rent.

*B. Basic Cost Concepts - Q16 to Q30*

16. *Q*: Direct vs Indirect cost? *A*: Direct traceable to product. Indirect needs allocation.

17. *Q*: Variable vs Fixed cost behavior? *A*: VC total changes with output. FC total constant.

18. *Q*: What is semi-variable cost? *A*: Has fixed + variable component. E.g. electricity.

19. *Q*: Prime cost formula? *A*: Direct Material + Direct Labor.

20. *Q*: Conversion cost formula? *A*: Direct Labor + Factory Overhead.

21. *Q*: Product vs Period cost? *A*: Product cost goes to inventory. Period cost expensed now.

22. *Q*: What is sunk cost? *A*: Already incurred, irrelevant for decisions.

23. *Q*: Engineered vs Discretionary cost? *A*: Engineered has cause-effect, e.g. DM. Discretionary set by budget, e.g. ads.

24. *Q*: What is step cost? *A*: Fixed over range, jumps at new level. E.g. supervisor salary.

25. *Q*: What is relevant range? *A*: Output range where cost behavior assumptions hold true.

26. *Q*: What is opportunity cost? *A*: Benefit lost by choosing one option over next best.

27. *Q*: Inventoriable cost? *A*: All manufacturing costs: DM + DL + FOH.

28. *Q*: COGS formula? *A*: Opening FG + COGM - Closing FG.

29. *Q*: COGM formula? *A*: Opening WIP + Total mfg cost - Closing WIP.

30. *Q*: What is cost object? *A*: Anything for which cost is measured: product, dept, customer.

*C. Basic Business Acumen - Q31 to Q40*

31. *Q*: What are 4 Ps of marketing? *A*: Product, Price, Place, Promotion.

32. *Q*: What is SWOT? *A*: Strengths, Weaknesses, Opportunities, Threats for strategy.

33. *Q*: What is value chain? *A*: Activities that add value from supplier to customer.

34. *Q*: What is competitive advantage? *A*: Ability to outperform rivals via cost or differentiation.

35. *Q*: What is economies of scale? *A*: Cost per unit falls as output increases.

36. *Q*: What are diseconomies of scale? *A*: Cost per unit rises after optimal size due to inefficiency.

37. *Q*: What is break-even point? *A*: Sales where total revenue = total cost. Profit = 0.

38. *Q*: BEP in units formula? *A*: Fixed Cost / Contribution per unit.

39. *Q*: What is margin of safety? *A*: Sales above BEP. MOS = Actual sales - BEP sales.

40. *Q*: What is operating leverage? *A*: % change in profit / % change in sales. Higher FC = higher leverage.

*D. Accounting Information System - Q41 to Q50*

41. *Q*: 3 components of AIS? *A*: People, Procedures + instructions, Data + software.

42. *Q*: What is audit trail? *A*: Record of all transactions + changes for tracking.

43. *Q*: Input control example? *A*: Range check, limit check to prevent wrong data entry.

44. *Q*: Processing control example? *A*: Run-to-run totals to check all data processed.

45. *Q*: Output control example? *A*: Review output for reasonableness before distribution.

46. *Q*: What is ERP? *A*: Integrated system for all business functions: finance, HR, inventory.

47. *Q*: Source document in purchase cycle? *A*: Purchase Order, Goods Received Note, Vendor Invoice.

48. *Q*: What is segregation of duties in AIS? *A*: Different person for authorization, recording, custody.

49. *Q*: Cloud vs On-premise AIS risk? *A*: Cloud = data security risk. On-premise = maintenance cost risk.

50. *Q*: What is master file? *A*: Permanent data file like customer/vendor master in AIS.

*E. Basic Economics - Q51 to Q60*

51. *Q*: Law of demand? *A*: Price ↑, Quantity demanded ↓, other things equal.

52. *Q*: Law of supply? *A*: Price ↑, Quantity supplied ↑, other things equal.

53. *Q*: What is elasticity? *A*: % change in Q demanded / % change in price.

54. *Q*: What are factors of production? *A*: Land, Labor, Capital, Entrepreneurship.

55. *Q*: Short run vs Long run? *A*: Short run: at least 1 factor fixed. Long run: all factors variable.

56. *Q*: What is diminishing marginal returns? *A*: Adding more of variable input yields smaller output increase.

57. *Q*: GDP vs GNP? *A*: GDP = output in country. GNP = output by country’s citizens.

58. *Q*: Inflation effect on accounting? *A*: Historical cost understates asset value, overstates profit.

59. *Q*: What is opportunity cost in economics? *A*: Value of next best alternative foregone.

60. *Q*: Perfect competition feature? *A*: Many buyers/sellers, identical product, price taker.

*F. Corporate Governance - Q61 to Q70*

61. *Q*: 3 main parties in governance? *A*: Board of Directors, Management, Shareholders.

62. *Q*: Role of Audit Committee? *A*: Oversee financial reporting, IA, external audit, risk.

63. *Q*: What is agency problem? *A*: Conflict between owners and managers due to different interests.

64. *Q*: Board independence importance? *A*: Prevents management override, protects shareholders.

65. *Q*: What is tone at top? *A*: Ethical culture set by senior management/board.

66. *Q*: What is whistleblower policy? *A*: Channel for employees to report misconduct without retaliation.

67. *Q*: CEO/Chair duality risk? *A*: Reduces board independence, weakens oversight.

68. *Q*: Sarbanes-Oxley Section 404? *A*: Management must assess internal controls over financial reporting.

69. *Q*: Stakeholder theory vs Shareholder theory? *A*: Stakeholder: serve all groups. Shareholder: maximize owner wealth.

70. *Q*: What is fiduciary duty of directors? *A*: Duty of care + duty of loyalty to company.

*G. Basic Data Analytics - Q71 to Q80*

71. *Q*: 4 types of data analytics? *A*: Descriptive, Diagnostic, Predictive, Prescriptive.

72. *Q*: Descriptive analytics example? *A*: Sales report, dashboard showing past performance.

73. *Q*: Predictive analytics example? *A*: Forecast next month sales using past data.

74. *Q*: What is data mining? *A*: Finding patterns in large data sets.

75. *Q*: Big Data 3 Vs? *A*: Volume, Velocity, Variety.

76. *Q*: Benford’s Law use in audit? *A*: Detect fraud by checking digit frequency in data.

77. *Q*: What is visualization in analytics? *A*: Charts/graphs to make data insights clear.

78. *Q*: Structured vs Unstructured data? *A*: Structured = rows/columns. Unstructured = emails, images.

79. *Q*: What is KPI? *A*: Key Performance Indicator to measure success.

80. *Q*: Data analytics benefit for MA? *A*: Better budgeting, variance analysis, fraud detection.

*H. Stakeholders + Production + Costing Methods - Q81 to Q100*

81. *Q*: Who are internal stakeholders? *A*: Employees, managers, owners.

82. *Q*: Who are external stakeholders? *A*: Customers, suppliers, govt, creditors, community.

83. *Q*: Customer interest from company? *A*: Quality product at fair price, timely delivery.

84. *Q*: Govt interest from company? *A*: Taxes, legal compliance, employment.

85. *Q*: Creditor interest? *A*: Timely repayment + interest, financial stability.

86. *Q*: High-Low method purpose? *A*: Separate fixed + variable part of mixed cost.

87. *Q*: High-Low VC rate formula? *A*: (Cost at high - Cost at low) / (Activity at high - Activity at low).

88. *Q*: What is overcosting? *A*: Product charged more OH than actual resources used.

89. *Q*: What is undercosting? *A*: Product charged less OH than actual resources used.

90. *Q*: Overapplied overhead meaning? *A*: Applied OH > Actual OH. Dr OH Control, Cr COGS.

91. *Q*: Underapplied overhead meaning? *A*: Actual OH > Applied OH. Dr COGS, Cr OH Control.

92. *Q*: How to dispose underapplied OH? *A*: Write off to COGS, or prorate to WIP, FG, COGS.

93. *Q*: Diseconomies of scale cause? *A*: Bureaucracy, communication gap, coordination loss in large firm.

94. *Q*: Short run production decision? *A*: Can change variable input only. FC remains.

95. *Q*: Long run production decision? *A*: Can change all inputs including plant size.

96. *Q*: What is joint cost? *A*: Common cost before split-off point for multiple products.

97. *Q*: Joint cost allocation method? *A*: Physical units method or Net Realizable Value method.

98. *Q*: What is cost tracing? *A*: Direct assignment of cost to cost object.

99. *Q*: What is cost allocation? *A*: Assign indirect cost using allocation base.

100. *Q*: What is reapportionment? *A*: Secondary allocation of service dept cost to production depts.

*Exam Tip*: For CMA + ACCA MA, focus on definitions + formulas + “why it matters”. They test application, not theory essays.

Question on basic concepts of financial accounting, Cost Accounting, economics business acumen organisation structure etc

 Here are *100 Q&A* covering the topics you listed – based on *US CMA Part 1 Section A + ACCA MA/FMA*. Short, exam-focused, no fluff.

Mocktest.Basic concept of financial accounting,cost accounting, economics, accounting information system etc

*A. Basic Financial Accounting Concepts - Q1 to Q15*

1. *Q*: What is the accounting equation? *A*: 

2. *Q*: What is accrual basis vs cash basis? *A*: 

3. *Q*: What is matching principle? *A*

4. *Q*: What is conservatism principle? *A*

5. *Q*: What are 4 financial statements? *A*: 

6. *Q*: Debit vs Credit rule for assets..A..

7. *Q*: What is contra account? *A*: 

8. *Q*: What is revenue recognition 5-step model? *A*: 

9. *Q*: What is materiality concept? *A*: 

10. *Q*: What is going concern assumption? *A*:

11. *Q*: What is consistency principle? *A*: 

12. *Q*: What is entity concept? *A*: 

13. *Q*: What is historical cost principle? *A*: 

14. *Q*: What is trial balance purpose? *A*

15. *Q*: What is adjusting entry for prepaid rent? *A*: 

*B. Basic Cost Concepts - Q16 to Q30*

16. *Q*: Direct vs Indirect cost? *A*: 

17. *Q*: Variable vs Fixed cost behavior? *A*:

18. *Q*: What is semi-variable cost? A .

19. *Q*: Prime cost formula? *A*: 

20. *Q*: Conversion cost formula..A ....

21. *Q*: Product vs Period cost? *A...

22. *Q*: What is sunk cost? *A*: 

23. *Q*: Engineered vs Discretionary cost? *A*:

24. *Q*: What is step cost? *A*: 

25. *Q*: What is relevant range? *A .

26. *Q*: What is opportunity cost? *A*:

27. *Q*: Inventoriable cost? *A*: 

28. *Q*: COGS formula? *A*:

29. *Q*: COGM formula? *A*:

30. *Q*: What is cost object? *A*:

*C. Basic Business Acumen - Q31 to Q40*

31. *Q*: What are 4 Ps of marketing? *A*: 

32. *Q*: What is SWOT? *A*: 

33. *Q*: What is value chain? *A*: 

34. *Q*: What is competitive advantage? *A*: 

35. *Q*: What is economies of scale? *A

36. *Q*: What are diseconomies of scale? *A*:

37. *Q*: What is break-even point? *A*

38. *Q*: BEP in units formula? *A*:

39. *Q*: What is margin of safety? *A*: 

40. *Q*: What is operating leverage? *A..

*D. Accounting Information System - Q41 to Q50*

41. *Q*: 3 components of AIS? *A*:

42. *Q*: What is audit trail? *A*: 

43. *Q*: Input control example? *A*

44. *Q*: Processing control example? *A*: .

45. *Q*: Output control example? *A*: 

46. *Q*: What is ERP? *A*: 

47. *Q*: Source document in purchase cycle? *A*

48. *Q*: What is segregation of duties in AIS? *A*: 

49. *Q*: Cloud vs On-premise AIS risk? *A*: 

50. *Q*: What is master file? *A*: 

*E. Basic Economics - Q51 to Q60*

51. *Q*: Law of demand? *A*:

52. *Q*: Law of supply? *A*

53. *Q*: What is elasticity? *A*:

54. *Q*: What are factors of production? *A*: 

55. *Q*: Short run vs Long run? *A*:

56. *Q*: What is diminishing marginal returns? *A*: 

57. *Q*: GDP vs GNP? *A*: .

58. *Q*: Inflation effect on accounting? *A*: 

59. *Q*: What is opportunity cost in economics? *A*: 

60. *Q*: Perfect competition feature? *A*:

*F. Corporate Governance - Q61 to Q70*

61. *Q*: 3 main parties in governance? *A*: 

62. *Q*: Role of Audit Committee? *A*: 

63. *Q*: What is agency problem? *A*: 

64. *Q*: Board independence importance? *A*: 

65. *Q*: What is tone at top? *A*:

66. *Q*: What is whistleblower policy? *A

67. *Q*: CEO/Chair duality risk? *A*: 

68. *Q*: Sarbanes-Oxley Section 404? *A*: 

69. *Q*: Stakeholder theory vs Shareholder theory? *A*: 

70. *Q*: What is fiduciary duty of directors? *A*:

*G. Basic Data Analytics - Q71 to Q80*

71. *Q*: 4 types of data analytics? *A*:

72. *Q*: Descriptive analytics example? *A*: 

73. *Q*: Predictive analytics example? *A

74. *Q*: What is data mining? *A*:

75. *Q*: Big Data 3 Vs? *A*: 

76. *Q*: Benford’s Law use in audit? *A*: Detect fraud by checking digit frequency in data.

77. *Q*: What is visualization in analytics? *A*: 

78. *Q*: Structured vs Unstructured data? *A*: 

79. *Q*: What is KPI? *A*:

80. *Q*: Data analytics benefit for MA? *A*: 

*H. Stakeholders + Production + Costing Methods - Q81 to Q100*

81. *Q*: Who are internal stakeholders? *A*: 

82. *Q*: Who are external stakeholders? *A*

83. *Q*: Customer interest from company? *A*: 

84. *Q*: Govt interest from company? *A*:

85. *Q*: Creditor interest? *A*:

86. *Q*: High-Low method purpose? *A*: 

87. *Q*: High-Low VC rate formula? *A*:

88. *Q*: What is overcosting? *A*: 

89. *Q*: What is undercosting? *A*: .

90. *Q*: Overapplied overhead meaning? *A*:

91. *Q*: Underapplied overhead meaning? *A*: 

92. *Q*: How to dispose underapplied OH? *A*:

93. *Q*: Diseconomies of scale cause? *A*:

94. *Q*: Short run production decision? *A*:

95. *Q*: Long run production decision? *A*: 

96. *Q*: What is joint cost? *A*: 

97. *Q*: Joint cost allocation method? *A*:

98. *Q*: What is cost tracing? *A*: 

99. *Q*: What is cost allocation? *A*:

100. *Q*: What is reapportionment? *A*: 

*Exam Tip*: For CMA + ACCA MA, focus on definitions + formulas + “why it matters”. They test application, not theory essays.

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For online exam mocktest software,access click here link 🖇️ 

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Case-Based MCQs – Revenue, Payroll & Procurement Cycles

  

Case-Based MCQs – Revenue, Payroll & Procurement Cycles

*Exam Style*: CIA Part 1/2, US CMA Part 1, ACCA F8/FIA  

*Focus*: Documents, Responsible Person, Risk Owner, Deliverables, Key Controls

*CASE 1: REVENUE CYCLE – “TechSell Ltd”*

*Scenario:*  

TechSell Ltd sells software licenses. Process flow:  

1. *Sales Rep* prepares Quote → approved by Sales Manager.  

2. *Customer Service* creates Sales Order in ERP using approved quote.  

3. *Warehouse* ships activation key via email; Delivery Note generated.  

4. *Billing Clerk* prepares Invoice from Sales Order + Delivery Note.  

5. *AR Clerk* records payment; *Treasury* deposits cash.  

6. *Credit Manager* sets credit limits and approves new customers.

*Risk Identified*: Sales orders created without credit approval for new customers. Last month $200k shipped to customer who later defaulted.

*Q1. Which document should be mandatory before creating a Sales Order for a new customer?*  

A. Delivery Note  

B. Purchase Order from customer  

C. Approved Credit Application Form  

D. Invoice  

*Answer: 

*Q2. Who is the PRIMARY risk owner for “revenue loss due to uncollectible sales”?*  

A. Sales Rep  

B. Billing Clerk  

C. Credit Manager  

D. CFO  

*Answer:.

*Q3. Which deliverable evidences that goods were transferred to customer under ASC 606?*  

A. Quote  

B. Sales Order  

C. Delivery Note/Proof of Delivery  

D. Invoice  

*Answer: 

*Q4. Segregation of Duties violation in TechSell would be:*  

A. Sales Rep prepares quote + approves quote  

B. Billing Clerk prepares invoice + AR Clerk records payment  

C. Credit Manager approves credit + collects cash  

D. Warehouse ships + Billing invoices  

*Answer:

*CASE 2: PAYROLL CYCLE – “ManuCorp”*

*Scenario:*  

ManuCorp has 500 employees. Process:  

1. *Supervisors* approve timesheets in system.  

2. *HR Manager* adds new hires/terminations and updates salary master file.  

3. *Payroll Clerk* processes payroll using approved timesheets + HR master data.  

4. *Treasury Manager* releases EFT payments after reviewing payroll register.  

5. *HR Manager* also reconciles payroll bank account.  

*Risk*: Ghost employee detected last audit – salary paid to terminated employee for 3 months.

*Q5. Which key control failed that allowed payment to terminated employee?*  

A. Supervisor approval of timesheets  

B. Independent reconciliation of payroll bank account  

C. Timely HR update of master file + restricted access  

D. Treasury review of payroll register  

*Answer:

*Q6. Who should be the risk owner for “unauthorized changes to payroll master file”?*  

A. Payroll Clerk  

B. HR Manager  

C. IT Manager  

D. Treasury Manager  

*Answer: 

*Q7. Key deliverable from payroll processing that Treasury uses to authorize payment:*  

A. Timesheets  

B. Payroll Register/Report  

C. HR Appointment Letter  

D. Bank Statement  

*Answer: 

*Q8. SOD conflict in ManuCorp is:*  

A. Supervisor approves timesheet + Payroll Clerk processes  

B. HR Manager updates master file + reconciles payroll bank account  

C. Treasury releases payment + CFO reviews  

D. Payroll Clerk processes + Treasury pays  

*Answer

*CASE 3: PROCUREMENT CYCLE – “BuildCo”*

*Scenario:*  

BuildCo construction company. Process:  

1. *Site Engineer* raises Purchase Requisition when stock low.  

2. *Purchase Manager* selects vendor, creates Purchase Order. Approved by *Procurement Head* if >$50k.  

3. *Receiving Dept* checks goods vs PO, prepares Goods Received Note.  

4. *AP Clerk* 3-way matches: PO + GRN + Invoice, then records payable.  

5. *Treasury* makes payment after *Finance Manager* approval.  

6. *Vendor Master* maintained by *Purchase Manager*.

*Risk*: Duplicate payments made to vendor due to duplicate invoices. AP Clerk paid same invoice twice.

*Q9. Which document is missing in 3-way match if duplicate payment occurred?*  

A. Purchase Order  

B. Goods Received Note  

C. Vendor Invoice  

D. None – all present but control failed  

*Answer:

*Q10. Who should be risk owner for “unauthorized changes to Vendor Master File”?*  

A. AP Clerk  

B. Purchase Manager  

C. IT Manager  

D. Finance Manager  

*Answer: 

*Q11. Key preventive control to avoid ordering unneeded goods:*  

A. 3-way match  

B. Approved Purchase Requisition by Dept Head  

C. Invoice approval  

D. Bank reconciliation  

*Answer: 

*Q12. Deliverable evidencing that goods were actually received in good condition:*  

A. Purchase Order  

B. Purchase Requisition  

C. Goods Received Note signed by Receiving Dept  

D. Vendor Invoice  

*Answer: 

SUMMARY TABLE – KEY ROLES BY CYCLE.. Gmsisuccess students, please refer this..

**Cycle** **Key Document** **Responsible Person** **Risk Owner** **Key Deliverable**

**Revenue** Sales Order, Invoice, Delivery Note Sales Rep, Billing Clerk Credit Manager Aged AR Report, Credit Approval

**Payroll** Timesheet, Payroll Register Supervisor, Payroll Clerk HR Manager Payroll Register, Bank Rec

**Procurement** PR, PO, GRN, Invoice Site Engineer, Purchase Mgr Purchase Mgr, Receiving Head 3-way Match Report, PO Register

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*EXAM TIPS – CIA/CMA/ACCA*  

1. *Risk Owner* = Manager with authority to manage/mitigate risk, not auditor.  

2. *SOD*: Never combine Authorization + Custody + Recording + Reconciliation.  

3. *Documents*: PR→PO→GRN→Invoice→Payment. Missing any link = control gap.  

4. *Deliverable* = tangible output used for next step: PO, GRN, Payroll Register.  

5. *Integration*: IA must understand these cycles to test controls, but never perform them.

casebased MCQ All topic CIA part 1

 Integration + Objectivity for Internal Auditors

CIA Part 1 – 2025 New Syllabus: Domain I – Foundations of Internal Auditing

Topic: Integration + Objectivity for Internal Auditors  

*Standard Ref*: IIA Global Internal Audit Standards 2024 – Principle 2: Integrity, Objectivity, and Due Professional Care; Standard 2.1 Integrity, 2.2 Objectivity; Domain III Standard 9.1 Understanding Governance, Risk, Control

*CASE-BASED MCQ: 

*Case:*  

You are an internal auditor at TechNova Inc. You previously worked in the Accounts Payable department for 3 years and transferred to Internal Audit 6 months ago. 

The Chief Audit Executive assigns you to lead an assurance engagement of the “Procure-to-Pay” process, which includes AP controls you helped design and implement 1 year ago. 

During planning, management asks you to also “co-source” with the AP team to redesign a new vendor onboarding workflow because of your prior expertise. The new workflow will go live next quarter and will be part of your audit scope.

*Q1. What is the MOST appropriate action to maintain objectivity under the 2025 Global Internal Audit Standards?*  

A. Accept both roles because your AP expertise will increase audit quality and integration.  

B. Accept the audit assignment but disclose prior involvement and decline the redesign role to avoid impairment.  

C. Decline the audit assignment due to impairment, but you may perform the redesign since it’s consulting.  

D. Accept both roles if CAE approves and you document safeguards in workpapers.  

Answer: 

*CASE 2: 

*Case:*  

Internal Audit is asked to join the “Digital Transformation Steering Committee” as a voting member. The committee makes decisions on system selection and project funding. The CAE believes this will help integrate audit with strategy and provide real-time risk input.

*Q2. Under CIA Part 1 2025 syllabus, what should the CAE do to maintain objectivity while achieving integration?*  

A. Accept voting membership because audit must be integrated with strategy.  

B. Decline all participation to preserve independence.  

C. Accept as non-voting advisor/observer to provide risk insight without decision-making authority.  

D. Accept voting if audit discloses it in the audit report.  

Answer: 

*KEY CIA PART 1 2025 CONCEPTS TESTED*

**Concept** **Rule – New Standards** **Impairment Trigger**

**Objectivity** Std 2.2: Must be impartial, unbiased Auditing own work within 1 year

**Integration** Audit understands business, provides insight Assuming mgmt decision-making

**Safeguards** Disclosure, reassignment, supervision Cannot cure auditing own work <1yr

**Consulting vs Assurance** Can consult if no mgmt responsibility Performing design + later audit = impairment

**Cooling-off Period** 1 year for prior operational roles Less than 1 year = must decline/assign other

*EXAM TIP: “Integration vs Independence” Questions*

CIA Part 1 2025 loves this distinction:  

1. *Integration = Good*: Know the business, advise, be proactive.  

2. *Independence/Objectivity = Required*: Don’t decide, don’t implement, don’t audit own work.  

3. *Red flag words*: “voting member”, “design”, “implement”, “approve”, “auditing own area <1 year” = impairment.  

4. *Correct answer*: Usually “advise/observer” or “disclose + reassign”.

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*CIA Part 1 – 2025 New Syllabus*  

*Domain I: Foundations of Internal Auditing*  

*Topic*: Ethics & Professionalism – IIA Global Internal Audit Standards 2024  

*Key Standards*: Principle 2 – Integrity, Objectivity, Due Professional Care; Std 1.2 Code of Ethics; Std 2.1 Integrity; Std 2.2 Objectivity; Std 2.3 Due Professional Care

---

*CASE-BASED MCQ 1: 

*Case:*  

Internal Auditor Maya is assigned to audit the Travel & Entertainment expenses of the Marketing Department. During planning, she discovers that her brother-in-law is the Marketing Director who approves all T&E claims. Maya and her brother-in-law are very close and meet socially every weekend. 

Maya did not disclose this relationship to the CAE because she believes she can remain unbiased. During fieldwork, she finds several T&E claims lacking receipts, but all are approved by her brother-in-law. She decides to exclude those items from her sample “to avoid awkwardness.”

*Q1. Which principle of the IIA Code of Ethics has Maya MOST clearly violated?*  

A. Competency – because she lacks T&E audit skills  

B. Confidentiality – because she discussed with brother-in-law  

C. Integrity – because she failed to disclose conflict and altered work  

D. Objectivity – because she excluded findings due to personal relationship  

*Answer

Q2

*Case:*  

Carlos, a CIA, is asked to lead an audit of the company’s new AI-driven credit scoring model. Carlos has 10 years of operational audit experience but has never audited AI/algorithms and has no training in data science. 

The CAE says, “You’re smart, just read a few articles and do your best.” Carlos accepts, performs limited testing by checking 5 loans manually, and concludes “controls are adequate” without understanding the model logic.

Six months later, regulators fine the company because the AI model had discriminatory bias that Carlos did not identify.

*Q2. Which aspect of Due Professional Care did Carlos fail to exercise?*  

A. He failed to maintain confidentiality of AI model  

B. He failed to obtain necessary competencies before accepting the engagement  

C. He failed to report to the board  

D. He failed to use technology in the audit  

*Answer: 

*CASE-BASED MCQ 3:

*Case:*  

During an audit of Vendor Management, the procurement team invites Internal Auditor Priya to their annual vendor conference at a 5-star resort. The vendor pays for Priya’s hotel, meals, and golf. The CAE policy allows gifts <$100, but this package is worth $1,200. 

Priya attends because “it’s a good networking opportunity to understand vendor risks.” She does not disclose to CAE. In her audit report, she rates Vendor Management as “Effective” despite finding weak vendor due diligence.

*Q3. Which ethical principles has Priya violated?*  

A. Objectivity only  

B. Integrity and Objectivity  

C. Confidentiality and Competency  

D. No violation if policy allows networking  

*Answer:

*KEY ETHICS CONCEPTS – CIA 2025 SYLLABUS*

**Principle** **2025 Standard** **Red Flags in Cases** **Required Action**

**Integrity** 2.1 – Honest, diligent, responsible Hide facts, alter scope, false report Disclose all material facts; report truthfully

**Objectivity** 2.2 – Impartial, no conflict Family/financial/personal interest, gifts Disclose conflict; CAE reassign if impaired

**Confidentiality** 1.2 – No unauthorized disclosure Share audit info externally Get approval; use info only for work

**Competency** 2.3 – Due Prof Care: possess skills Accept engagement without expertise Decline or obtain expert/co-source

**Professionalism** Domain I – Acts creditable to profession Gifts, inappropriate behavior Follow policy; avoid disrepute

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*CIA EXAM TRAP – 2025*  

New syllabus tests “integration of ethics with action”. Watch for:  

1. *“Did not disclose”* = Integrity violation, even if no bias proven.  

2. *“Accept work without skills”* = Due Professional Care failure.  

3. *“Gifts/networking”* = Test if > nominal value or policy.  

4. *Best answer* usually = “Disclose to CAE 

*CIA Part 1 – 2025 New Syllabus*  

*Domain I: Foundations of Internal Auditing + Domain III: Governance, Risk & Control*  

*Integrated Topic*: Ethics & Professionalism + Corporate Governance + Fraud Risk  

*Standards Ref*: IIA Global Standards 2024 – Principle 1 Ethics, Principle 2 Integrity/Objectivity, Std 9.1 Governance, Std 9.2 Risk Management, Std 9.3 Fraud

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*CASE-BASED MCQ: ETHICS + GOVERNANCE + FRAUD RISK*

*Case:*  

You are a Senior Internal Auditor at Apex Manufacturing. During the annual audit plan presentation to the Audit Committee, the CEO privately asks you to “go easy” on the upcoming audit of Executive Compensation because “the board is sensitive about this right now and we need to maintain investor confidence.” 

The CEO also mentions that the CAE’s bonus is tied to “positive assurance reports with no major findings.” You learn that last year, the CAE removed a significant finding about excessive CEO perquisites after CEO pressure, and the final report to the Audit Committee showed “Satisfactory” rating.

Current facts:  

1. *Governance Issue*: Audit Committee meets only twice per year and relies entirely on CAE summaries; they do not receive raw audit reports.  

2. *Fraud Risk Indicator*: Executive expense reimbursements have no independent review; CEO self-approves.  

3. *Ethics Issue*: CAE has not disclosed the bonus structure to Audit Committee.

*Q1. What is the MOST significant violation of corporate governance under the IIA Standards?*  

A. CEO speaking directly to internal auditor  

B. Audit Committee meeting only twice per year  

C. Lack of direct reporting/access of CAE to Audit Committee and impaired independence  

D. Internal audit not auditing fraud risk  

*Answer:

*Q2. Which ethical principle has the CAE MOST directly violated by removing the finding after CEO pressure?*  

A. Competency  

B. Confidentiality  

C. Integrity  

D. Due Professional Care  

*Answer:

*Q3. Which fraud risk factor from the “Fraud Triangle” is MOST evident in the Executive Compensation process?*  

A. Pressure – CAE bonus tied to clean reports  

B. Opportunity – CEO self-approves expenses with no independent review  

C. Rationalization – CEO says “maintain investor confidence”  

D. All three are present  

*Answer:

*Q4. As the Senior Internal Auditor, what is your MOST appropriate immediate action under the Code of Ethics?*  

A. Follow CEO instruction to maintain good relationship with management  

B. Document the CEO request and discuss with CAE only  

C. Escalate to Audit Committee Chair due to independence impairment and potential fraud risk  

D. Refuse the Executive Compensation audit and request reassignment  

*Answer: 

*KEY INTEGRATED CONCEPTS – CIA PART 1 2025*

**Area** **IIA Standard 2024** **What CIA Tests** **Red Flag**

**Governance** 9.1 – Board/AC oversees IA CAE reports functionally to AC, AC approves charter/budget Mgmt sets CAE comp, filters reports

**Ethics – Integrity** 2.1 – Honest, disclose facts Changing reports due to pressure “Go easy”, “remove finding”

**Ethics – Objectivity** 2.2 – Impartial, disclose conflicts Bonus tied to results, family ties Performance pay linked to audit rating

**Fraud Risk** 9.3 – IA assesses fraud risk Fraud Triangle in process design Self-approval, no segregation, override

**Professionalism** Domain I – Uphold profession Escalate impairments, protect AC Staying silent to protect job

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*EXAM STRATEGY FOR INTEGRATED Qs*  

1. *Look for “CAE comp/independence”* = Governance + Ethics breach.  

2. *“CEO/CFO pressure to change report”* = Integrity violation, not just objectivity.  

3. *“Self-approval/no review”* = Opportunity in Fraud Triangle.  

4. *Best answer* = Escalate to Audit Committee/Board. Never just “discuss with management” when mgmt is the issue.

*CIA Part 1 – 2025 New Syllabus: 20 MCQs*  

*Domains*: I. Foundations, II. Ethics & Professionalism, III. Governance, Risk, Control  

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*I. FOUNDATIONS OF INTERNAL AUDITING – 5 Qs*

*Q1. Assertion (A): Internal audit must be independent of management.*  

*Reason (R): Independence is achieved when CAE reports administratively to CEO.*  

A. Both A and R true, R correct explanation  

B. Both true, R not correct explanation  

C. A true, R false  

D. A false, R true  

*Q2. All of the following are mandatory elements of the IPPF 2024 EXCEPT:*  

A. Global Internal Audit Standards  

B. Topical Requirements  

C. Implementation Guides  

D. Code of Ethics now embedded in Principle 1  

*Q3. Odd Man Out – Internal Audit Services:*  

A. Assurance engagement on cybersecurity controls  

B. Consulting engagement to design new AP workflow  

C. Investigation of suspected fraud  

D. Approving vendor payments  

*Q4. Which is NEITHER a purpose of the Internal Audit Charter per Std 6.1?*  

A. Define IA authority  

B. Establish IA position in org  

C. Specify IA’s annual bonus metrics  

D. Define scope of IA services  

*Q5. Logical Reasoning: If all assurance services provide independent assessment, and some consulting services improve operations, then:*  

A. All consulting services provide independent assessment  

B. Some services that improve operations are assurance services  

C. No assurance service improves operations  

D. Some services providing independent assessment improve operations  

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*II. ETHICS & PROFESSIONALISM – 5 Qs*

*Q6. Assertion (A): Auditors must disclose all material facts known to them.*  

*Reason (R): Non-disclosure violates Integrity per Std 2.1.*  

A. Both A and R true, R correct explanation  

B. Both true, R not correct explanation  

C. A true, R false  

D. A false, R true  

*Q7. All of the following impair objectivity EXCEPT:*  

A. Auditing an area where auditor worked 6 months ago  

B. CAE’s bonus tied to reducing external audit fees  

C. Accepting gift of $25 promotional pen from auditee  

D. Spouse is CFO of auditee department  

*Q8. Odd Man Out – Principles in 2024 Global Standards:*  

A. Integrity  

B. Objectivity  

C. Independence  

D. Due Professional Care  

*Q9. An auditor lacks IT skills but accepts an ERP audit. This violates:*  

A. Confidentiality  

B. Competency under Due Professional Care Std 2.3  

C. Integrity  

D. Neither, if CAE approves  

*Q10. Which statement is NEITHER required by the Code of Ethics?*  

A. Avoid conflicts of interest  

B. Not knowingly be party to illegal acts  

C. Guarantee all errors will be detected  

D. Continually improve proficiency  

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*III. GOVERNANCE, RISK & CONTROL – 10 Qs*

*Q11. Assertion (A): The board is ultimately responsible for governance.*  

*Reason (R): Internal audit provides assurance on governance per Std 9.1.*  

A. Both A and R true, R correct explanation  

B. Both true, R not correct explanation  

C. A true, R false  

D. A false, R true  

*Q12. All of the following are components of COSO ERM 2017 EXCEPT:*  

A. Governance & Culture  

B. Strategy & Objective-Setting  

C. Control Activities  

D. Information & Communication  

*Q13. Odd Man Out – Three Lines Model Roles:*  

A. Management – 1st line: owns risks  

B. Risk & Compliance – 2nd line: monitors  

C. Internal Audit – 3rd line: independent assurance  

D. External Audit – 3rd line: statutory audit  

*Q14. Fraud Triangle: Opportunity is MOST reduced by:*  

A. Code of Conduct training  

B. Segregation of duties  

C. Whistleblower hotline  

D. Employee background checks  

*Q15. Which is NEITHER a responsibility of Internal Audit regarding fraud per Std 9.3?*  

A. Evaluate fraud risk management  

B. Investigate all frauds detected  

C. Assess fraud controls  

D. Have sufficient knowledge of fraud  

*Q16. Assertion (A): Risk appetite is set by management.*  

*Reason (R): Board oversees risk appetite but does not set it.*  

A. Both A and R true, R correct explanation  

B. Both true, R not correct explanation  

C. A true, R false  

D. A false, R true  

*Q17. All of the following are IT general controls EXCEPT:*  

A. Program change management  

B. Access security  

C. Automated 3-way match in AP  

D. Backup & recovery  

*Q18. Odd Man Out – Control Types:*  

A. Preventive: Access controls  

B. Detective: Bank reconciliation  

C. Corrective: Insurance policy  

D. Directive: Policies & procedures  

*Q19. Logical Reasoning: If strong entity-level controls exist, then process-level controls:*  

A. Are not needed  

B. May be reduced but not eliminated  

C. Must be increased  

D. Are always automated  

*Q20. Which is NEITHER an example of “Tone at the Top” in governance?*  

A. CEO signs Code of Ethics annually  

B. Audit Committee meets quarterly with CAE private session  

C. Management overrides controls for “efficiency”  

D. Board approves risk appetite statement  

*Scoring*: 16+ = CIA Ready, 12-15 = Review Standards, <12 = Reread Domain I & III.

*2025 Syllabus Weight*: Domain I 35%, Domain II 15%, Domain III 50% = This set matches.

*100 MCQs – US CMA Part 1 + ACCA FMA/F2 Foundation* ANSWERS PROVIDED AT THE END....

100 MCQs – US CMA Part 1 + ACCA FMA/F2 Foundation* ANSWERS PROVIDED AT THE END....

*Coverage*: Financial Reporting, Cost Accounting Basics, AIS, Business Acumen, Stakeholders, Cost Types  

*Format*: 100 Qs + Answer Key with 1-line rationale. Use for practice. Target: 90 min.

*PART 1: FINANCIAL REPORTING BASICS – 25 Qs*

*Q1.* Which accounting principle requires expenses matched with revenues?  

A. Consistency  B. Matching  C. Materiality  D. Conservatism  

*Q2.* Under US GAAP, inventory is valued at:  

A. Cost only  B. NRV only  C. Lower of cost or NRV  D. Lower of cost or market  

*Q3.* Which is NOT a component of Equity?  

A. Retained Earnings  B. Common Stock  C. Treasury Stock  D. Bonds Payable  

*Q4.* Depreciation is an example of:  

A. Cash outflow  B. Non-cash expense  C. Revenue  D. Liability  

*Q5.* Issued Capital – Subscribed Capital = ?  

A. Authorized capital  B. Unissued capital  C. Calls in arrears  D. Paid-up capital  

*Q6.* 10% Stock dividend when MV $20, Par $10. For 1,000 shares issued, RE debit = ?  

A. $10,000  B. $20,000  C. $2,000  D. $1,000  

*Q7.* Trading securities unrealized gain/loss goes to:  

A. OCI  B. I/S  C. RE directly  D. B/S only  

*Q8.* ASC 606 Step 3 is:  

A. Identify contract  B. Identify PO  C. Determine transaction price  D. Allocate price  

*Q9.* Finance lease criteria: Lease term = 80% of economic life. Classification?  

A. Operating  B. Finance  C. Sales-type  D. Short-term  

*Q10.* Bad debt written off, later recovered. Entry:  

A. Dr Cash, Cr Bad Debt Expense  

B. Dr Cash, Cr Bad Debt Recovery  

C. Dr A/R, Cr Allowance, then Dr Cash, Cr A/R  

D. Both B and C acceptable  

*Q11.* Purchase commitment loss recognized when:  

A. Contract signed  

B. MV < Contract price + loss probable  

C. Goods received  

D. Never  

*Q12.* Entity Theory states:  

A. Business = owner  B. Assets = Equities  C. Profit belongs to owner only  D. No separate entity  

*Q13.* Financial Capital Maintenance = profit if:  

A. Physical units maintained  B. Ending net assets > Beg net assets in $  

C. Cash increased  D. Sales increased  

*Q14.* Which is current liability?  

A. Bonds due 2029  B. Deferred tax liability  C. Wages payable  D. Lease liability >12mo  

*Q15.* Warranty expense is recorded in period of:  

A. Payment  B. Sale  C. Claim  D. End of warranty  

*Q16.* CFO Indirect method starts with:  

A. Sales  B. Net Income  C. EBIT  D. Gross Profit  

*Q17.* Increase in A/R effect on CFO:  

A. Add  B. Subtract  C. No effect  D. Only if cash basis  

*Q18.* Intercompany profit in ending inventory must be:  

A. Ignored  B. Eliminated  C. Taxed  D. Added to NCI  

*Q19.* Annual Report primary users under IFRS Framework:  

A. Tax authorities  B. Existing & potential investors, lenders  

C. Employees  D. Government  

*Q20.* Which is NOT qualitative characteristic?  

A. Relevance  B. Faithful representation  C. Conservatism  D. Comparability  

*Q21.* Sum-of-years digits, life 4 yrs, Year 1 fraction = ?  

A. 4/10  B. 1/4  C. 4/12  D. 1/10  

*Q22.* DDB ignores salvage value until:  

A. Never  B. First year  C. Last year  D. Always  

*Q23.* Excess tax provision last year adjusted by:  

A. Dr Tax Expense, Cr Tax Payable  

B. Dr Tax Payable, Cr RE prior period adj  

C. Ignore  D. Dr Tax Payable, Cr Tax Expense  

*Q24.* HTM bond amortized cost increases when:  

A. Discount bond  B. Premium bond  C. Market falls  D. Sold  

*Q25.* Stakeholder with no financial claim but interest:  

A. Shareholder  B. Creditor  C. Community  D. Bank  

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*PART 2: COST ACCOUNTING BASICS & COST TYPES – 35 Qs*

*Q26.* Prime Cost =  

A. DM + DL  B. DL + MOH  C. DM + MOH  D. All costs  

*Q27.* Conversion Cost =  

A. DM + DL  B. DL + MOH  C. DM + MOH  D. Period cost  

*Q28.* Rent of factory building is:  

A. Direct cost  B. Period cost  C. Product fixed OH  D. Variable cost  

*Q29.* Salary of CEO is:  

A. Product cost  B. Period cost  C. Direct labor  D. MOH  

*Q30.* Cost that changes with activity but not proportionately:  

A. Fixed  B. Variable  C. Mixed  D. Step  

*Q31.* Committed fixed cost example:  

A. Advertising  B. Depreciation  C. Training  D. Sales commission  

*Q32.* Opportunity cost is:  

A. Recorded in books  B. Relevant for decision  C. Sunk cost  D. Always cash  

*Q33.* Sunk cost is:  

A. Future cost  B. Relevant  C. Irrelevant  D. Avoidable  

*Q34.* Absorption costing treats fixed OH as:  

A. Period cost  B. Product cost  C. Expense  D. Asset only  

*Q35.* When production > sales, which NOI higher?  

A. Variable  B. Absorption  C. Same  D. Depends  

*Q36.* High-low method weakness:  

A. Too accurate  B. Uses only 2 points  C. Complex  D. Needs regression  

*Q37.* Normal capacity based on:  

A. Max output  B. Long-term average demand  C. Current year  D. Zero downtime  

*Q38.* Under-applied OH means:  

A. Actual < Applied  B. Actual > Applied  C. No variance  D. Favorable  

*Q39.* Job costing used for:  

A. Oil refining  B. Custom furniture  C. Flour  D. Chemicals  

*Q40.* Process costing WIP equivalent units needed because:  

A. No WIP  B. Partially complete units  C. Only FG  D. Job order  

*Q41.* Abnormal spoilage is:  

A. Product cost  B. Period loss  C. Added to good units  D. Ignored  

*Q42.* Joint cost split-off point means:  

A. Products identifiable  B. Costs end  C. Sales begin  D. Separable costs start  

*Q43.* By-product accounting method:  

A. Allocate joint cost  B. NRV reduces main product cost  C. No entry  D. Always material  

*Q44.* Activity-based costing allocates OH using:  

A. One rate  B. Multiple cost drivers  C. DL hours only  D. Machine hours only  

*Q45.* Cost pool is:  

A. Single product  B. Group of costs with same driver  C. Direct cost  D. Period cost  

*Q46.* Unit-level activity:  

A. Setup  B. Drilling hole  C. Product design  D. Factory rent  

*Q47.* Throughput =  

A. SP – DM  B. SP – VC  C. SP – Total cost  D. GP  

*Q48.* Target costing: Price $100, Profit $20, Target cost = ?  

A. $120  B. $80  C. $100  D. $20  

*Q49.* Life-cycle cost includes:  

A. Production only  B. R&D to disposal  C. Selling only  D. Warranty only  

*Q50.* Kaizen costing aims for:  

A. One big cut  B. Continuous small cuts  C. Zero base  D. Standard cost  

*Q51.* Direct material is:  

A. Always variable  B. Can be fixed  C. Period cost  D. MOH  

*Q52.* Indirect labor is part of:  

A. DM  B. DL  C. MOH  D. SG&A  

*Q53.* Variable cost per unit:  

A. Changes with volume  B. Constant per unit  C. Zero  D. Changes total only  

*Q54.* Fixed cost per unit:  

A. Constant  B. Decreases as volume ↑  C. Increases as volume ↑  D. Zero  

*Q55.* Mixed cost example:  

A. Rent  B. DM  C. Utility with base + usage  D. Depreciation  

*Q56.* Relevant range is:  

A. 0 to infinity  B. Activity where cost behavior valid  C. Always 1 year  D. Budget range  

*Q57.* Controllable cost for dept manager:  

A. Allocated HQ rent  B. Dept supplies  C. Depreciation  D. Tax  

*Q58.* Differential cost =  

A. Sunk cost  B. Future cost that differs between options  

C. Historical cost  D. Opportunity cost  

*Q59.* Cost of quality – Prevention:  

A. Inspection  B. Training  C. Rework  D. Warranty  

*Q60.* External failure cost:  

A. Scrap  B. Testing  C. Customer returns  D. Design review  

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*PART 3: AIS & BUSINESS ACUMEN – 25 Qs*

*Q61.* AIS subsystem for payroll:  

A. GL  B. HRM  C. Expenditure cycle  D. Revenue cycle  

*Q62.* Segregation of duties: Authorize, Record, Custody should be:  

A. Same person  B. Separate  C. Two only  D. Not important  

*Q63.* Preventive control:  

A. Bank rec  B. Passwords  C. Variance analysis  D. Audit  

*Q64.* Detective control:  

A. Locks  B. Reconciliation  C. Training  D. Approval  

*Q65.* ERP benefit:  

A. Data silos  B. Real-time integration  C. More manual work  D. Less security  

*Q66.* Database: Primary key is:  

A. Duplicate allowed  B. Unique identifier  C. Foreign key  D. Null allowed  

*Q67.* XBRL used for:  

A. Encryption  B. Financial reporting tagging  C. Payroll  D. Firewall  

*Q68.* Data analytics: “Why did sales drop?” is:  

A. Descriptive  B. Diagnostic  C. Predictive  D. Prescriptive  

*Q69.* Blockchain key feature:  

A. Centralized  B. Immutable ledger  C. Easy to change  D. No security  

*Q70.* SOX 404 requires mgmt to:  

A. Outsource audit  B. Assess ICFR  C. Avoid controls  D. Use cash basis  

*Q71.* COSO cube does NOT include:  

A. Objectives  B. Components  C. Org structure  D. Tax rates  

*Q72.* Risk appetite is:  

A. Amount of risk to avoid all risk  

B. Broad amount of risk entity accepts  

C. Same as tolerance  D. Not defined  

*Q73.* Business acumen includes understanding:  

A. Only accounting  B. How business creates value  C. Tax law only  D. Audit only  

*Q74.* Porter’s Five Forces: Supplier power high when:  

A. Many suppliers  B. Few substitutes  C. Product not unique  D. Low switching cost  

*Q75.* SWOT: “Strong brand” is:  

A. Strength  B. Weakness  C. Opportunity  D. Threat  

*Q76.* Value chain primary activity:  

A. HR  B. Procurement  C. Operations  D. Technology  

*Q77.* Balanced Scorecard: “Employee training hours” =  

A. Financial  B. Customer  C. Internal  D. Learning & Growth  

*Q78.* KPI should be:  

A. SMART  B. Vague  C. Too many  D. Not measurable  

*Q79.* CSR stands for:  

A. Corporate Sales Return  B. Corporate Social Responsibility  

C. Cost Saving Ratio  D. Current Service Revenue  

*Q80.* ESG: “E” includes:  

A. Board diversity  B. Carbon emissions  C. Executive pay  D. Audit fees  

*Q81.* Stakeholder vs Shareholder: Stakeholder is:  

A. Narrower  B. Broader, includes non-owners  C. Same  D. Only employees  

*Q82.* Triple bottom line:  

A. Profit only  B. People, Planet, Profit  C. Assets, Liab, Equity  D. Sales, GP, NP  

*Q83.* Supply chain: Upstream =  

A. Customers  B. Suppliers  C. Retailers  D. Distributors  

*Q84.* JIT inventory goal:  

A. High stock  B. Zero inventory  C. EOQ  D. Safety stock  

*Q85.* EOQ minimizes:  

A. Only ordering cost  B. Only carrying cost  C. Sum of ordering + carrying  D. Stockout  

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*PART 4: MIXED CONCEPTS CMA/ACCA – 15 Qs*

*Q86.* ACCA FMA: Prime cost + MOH = ?  

A. Total cost  B. Conversion cost  C. Period cost  D. Marginal cost  

*Q87.* CMA: ROI can be improved by:  

A. ↓Sales  B. ↓Investment  C. ↑Expenses  D. ↓Margin  

*Q88.* RI advantage over ROI:  

A. % only  B. Avoids rejecting projects > WACC  C. Same  D. No advantage  

*Q89.* Master budget prepared first:  

A. Cash  B. Sales  C. Production  D. Capex  

*Q90.* Flexible budget variance = Actual – Flexible. This is:  

A. Volume variance  B. Efficiency/price variance  C. Sales variance  D. Static variance  

*Q91.* Capital vs Revenue expenditure: New roof extending life = ?  

A. Revenue  B. Capital  C. Expense  D. Liability  

*Q92.* Accrual basis records:  

A. Cash only  B. When earned/incurred  C. When paid  D. Hybrid  

*Q93.* Conservatism principle:  

A. Overstate assets  B. Anticipate losses, not gains  

C. Always use high estimates  D. Ignore losses  

*Q94.* Materiality depends on:  

A. Size & nature  B. Always 5%  C. Auditor only  D. Fixed $  

*Q95.* Cost object is:  

A. Anything cost is measured for  B. Cost driver  C. Cost pool  D. Allocation base  

*Q96.* Stewardship means mgmt is responsible for:  

A. Profit only  B. Resources entrusted by owners  

C. Tax  D. Sales  

*Q97.* Which report shows financial position at a point?  

A. I/S  B. B/S  C. CFS  D. SOCIE  

*Q98.* Which report shows performance over period?  

A. B/S  B. I/S  C. Statement of FP  D. Notes  

*Q99.* Management accounting focus:  

A. Past, external  B. Future, internal  C. Tax  D. Audit  

*Q100.* Code of Ethics: Objectivity means:  

A. Bias ok  B. No conflict of interest influence  C. Always agree with boss  D. Ignore facts  

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*ANSWER KEY*

*Part 1*: 1-B, 2-C, 3-D, 4-B, 5-B, 6-B, 7-B, 8-C, 9-B, 10-D, 11-B, 12-B, 13-B, 14-C, 15-B, 16-B, 17-B, 18-B, 19-B, 20-C, 21-A, 22-C, 23-D, 24-A, 25-C  

*Part 2*: 26-A, 27-B, 28-C, 29-B, 30-C, 31-B, 32-B, 33-C, 34-B, 35-B, 36-B, 37-B, 38-B, 39-B, 40-B, 41-B, 42-A, 43-B, 44-B, 45-B, 46-B, 47-A, 48-B, 49-B, 50-B, 51-A, 52-C, 53-B, 54-B, 55-C, 56-B, 57-B, 58-B, 59-B, 60-C  

*Part 3*: 61-C, 62-B, 63-B, 64-B, 65-B, 66-B, 67-B, 68-B, 69-B, 70-B, 71-D, 72-B, 73-B, 74-B, 75-A, 76-C, 77-D, 78-A, 79-B, 80-B, 81-B, 82-B, 83-B, 84-B, 85-C  

*Part 4*: 86-A, 87-B, 88-B, 89-B, 90-B, 91-B, 92-B, 93-B, 94-A, 95-A, 96-B, 97-B, 98-B, 99-B, 100-B  

*Key Rationale Snippets*:  

*Q3*: Bonds Payable = Liability, not Equity.  

*Q6*: Small stock dividend: 1,000×10%×$20 = $2,000, but RE debited at MV = $20k.  

*Q23*: Immaterial correction goes to current tax expense.  

*Q35*: Production > Sales → Absorption defers FC in inventory → Absorption NOI > Variable.  

*Q38*: Applied 9.5k×20=190k vs Actual 198k = 8k Under.  

*Q87*: ROI = Margin × Turnover. ↓Investment ↑Turnover ↑ROI.

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*How to Use This Mock*:  

1. *Score*: 80+ = strong, 65-79 = review weak sections, <65 = redo concepts.  

2. *CMA Weight*: Part 1 exam is 100 MCQs + 2 essays. This mirrors Section A-F coverage.  

3. *ACCA FMA*: Q1-Q60 map directly to MA/F2 syllabus.

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