100 MCQs – US CMA Part 1 Foundation Topics
*Covers: Basic Accounting, Economics, Cost Accounting, Business Acumen, Governance, Finance Terms, AIS, Revenue/Purchase/Payroll Cycles, Org Structure, Tech & Data Analytics*
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*Section 1: Basic Accounting Concepts – 15 Qs*
1. *GAAP stands for:*
A. Generally Accepted Audit Principles
B. Generally Accepted Accounting Principles
C. General Accounting Application Process
D. Government Accounting Auditing Procedures
*Answer: B*
2. *The accounting equation is:*
A. Assets = Liabilities + Equity
B. Assets = Liabilities – Equity
C. Assets + Liabilities = Equity
D. Assets + Equity = Liabilities
*Answer: A*
3. *Revenue is recognized when:*
A. Cash is received
B. Performance obligation is satisfied per ASC 606
C. Invoice is sent
D. Contract is signed
*Answer: B*
4. *Accrual basis records expenses when:*
A. Paid
B. Incurred, regardless of payment
C. Budgeted
D. Approved
*Answer: B*
5. *Which is a contra-asset account?*
A. Accounts Payable
B. Accumulated Depreciation
C. Sales Revenue
D. Prepaid Rent
*Answer: B*
6. *Depreciation is an example of:*
A. Matching principle
B. Revenue recognition
C. Conservatism
D. Full disclosure
*Answer: A*
7. *Current assets do NOT include:*
A. Inventory
B. Accounts Receivable
C. Land
D. Prepaid Insurance
*Answer: C*
8. *Debit to expense means:*
A. Expense increases
B. Expense decreases
C. Asset increases
D. Liability increases
*Answer: A*
9. *Trial balance purpose:*
A. Calculate net income
B. Prove debits = credits
C. Prepare tax return
D. Close books
*Answer: B*
10. *Adjusting entry for accrued salaries:*
A. Dr Cash, Cr Salaries Expense
B. Dr Salaries Expense, Cr Salaries Payable
C. Dr Salaries Payable, Cr Cash
D. Dr Retained Earnings, Cr Salaries Expense
*Answer: B*
11. *FIFO vs LIFO in rising prices: FIFO gives:*
A. Lower net income, lower inventory
B. Higher net income, higher inventory
C. Lower net income, higher inventory
D. Same result
*Answer: B*
12. *Book value of asset =*
A. Cost – Accumulated Depreciation
B. Market value
C. Replacement cost
D. Salvage value
*Answer: A*
13. *Unearned revenue is:*
A. Asset
B. Liability
C. Revenue
D. Equity
*Answer: B*
14. *Which statement shows financial position at a point in time?*
A. Income Statement
B. Balance Sheet
C. Cash Flow Statement
D. Statement of Retained Earnings
*Answer: B*
15. *Double-entry accounting means:*
A. Two sets of books
B. Every transaction affects at least 2 accounts
C. Record twice for accuracy
D. Debit twice, credit once
*Answer: B*
---
*Section 2: Basic Economics – 10 Qs*
16. *Opportunity cost is:*
A. Historical cost
B. Value of next best alternative forgone
C. Sunk cost
D. Fixed cost
*Answer: B*
17. *Law of demand: Price ↑, Quantity demanded:*
A. Increases
B. Decreases
C. Stays same
D. Zero
*Answer: B*
18. *Price elasticity >1 means demand is:*
A. Inelastic
B. Elastic
C. Unit elastic
D. Perfectly inelastic
*Answer: B*
19. *GDP measures:*
A. Total income of citizens
B. Total market value of goods/services produced in country
C. Government spending
D. Net exports
*Answer: B*
20. *In recession, Fed typically:*
A. Raises interest rates
B. Lowers interest rates
C. Increases taxes
D. Reduces money supply
*Answer: B*
21. *Monopoly has:*
A. Many sellers
B. One seller, high barriers to entry
C. Price takers
D. Homogeneous products
*Answer: B*
22. *CPI measures:*
A. Producer prices
B. Consumer price inflation
C. GDP growth
D. Unemployment
*Answer: B*
23. *Fiscal policy is controlled by:*
A. Federal Reserve
B. Government – taxing/spending
C. Banks
D. WTO
*Answer: B*
24. *Comparative advantage means:*
A. Produce all goods cheaper
B. Produce at lower opportunity cost
C. Absolute advantage
D. No trade
*Answer: B*
25. *Supply curve shifts right due to:*
A. Cost increase
B. Technology improvement
C. Tax increase
D. Fewer suppliers
*Answer: B*
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*Section 3: Basic Cost Accounting – 15 Qs*
26. *Prime cost =*
A. DM + DL + FOH
B. DM + DL
C. DL + FOH
D. Total manufacturing cost
*Answer: B*
27. *Conversion cost =*
A. DM + DL
B. DL + FOH
C. DM + FOH
D. Prime + FOH
*Answer: B*
28. *Fixed cost per unit:*
A. Constant
B. Decreases as volume increases
C. Increases as volume increases
D. Zero
*Answer: B*
29. *Variable cost total:*
A. Constant
B. Changes with volume
C. Zero at zero production
D. Both B & C
*Answer: D*
30. *Direct cost example:*
A. Factory rent
B. Wood for table
C. Supervisor salary
D. Depreciation
*Answer: B*
31. *Indirect cost is:*
A. Traceable to product
B. Not traceable, allocated
C. Prime cost
D. DM
*Answer: B*
32. *Job costing used for:*
A. Oil refining
B. Custom homes
C. Soft drinks
D. Chemicals
*Answer: B*
33. *Process costing used for:*
A. Shipbuilding
B. Cement
C. Consulting
D. Advertising
*Answer: B*
34. *Contribution margin =*
A. Sales – Fixed costs
B. Sales – Variable costs
C. Sales – COGS
D. Net income
*Answer: B*
35. *Break-even point units =*
A. Fixed costs / CM per unit
B. Fixed costs / Sales
C. Sales / CM ratio
D. VC / CM
*Answer: A*
36. *Margin of safety =*
A. Actual sales – Break-even sales
B. Break-even – Actual
C. Fixed costs / CM
D. Net income
*Answer: A*
37. *Overhead allocation base should be:*
A. Random
B. Cost driver causing OH
C. Always DL hours
D. Sales
*Answer: B*
38. *Normal costing uses:*
A. Actual DM, Actual DL, Actual OH
B. Actual DM, Actual DL, Applied OH
C. Standard all
D. Estimated all
*Answer: B*
39. *Sunk cost is:*
A. Relevant for decision
B. Past cost, irrelevant
C. Future cost
D. Opportunity cost
*Answer: B*
40. *Differential cost is:*
A. Sunk cost
B. Difference between alternatives
C. Fixed cost
D. Historical cost
*Answer: B*
---
*Section 4: Basic Business Acumen & Corporate Governance – 10 Qs*
41. *Board of Directors primary duty:*
A. Day-to-day operations
B. Oversight, strategy, risk, protect shareholders
C. Prepare financials
D. Sales
*Answer: B*
42. *Audit Committee must have:*
A. CEO as member
B. All independent directors, 1 financial expert
C. CFO chair
D. Internal auditors
*Answer: B*
43. *Sarbanes-Oxley 404 requires:*
A. Tax audit
B. Management assessment + auditor attestation of ICFR
C. Cost audit
D. Inventory audit
*Answer: B*
44. *Agency problem exists between:*
A. Customers & suppliers
B. Managers & shareholders
C. Employees & vendors
D. Auditors & mgmt
*Answer: B*
45. *Whistleblower program is part of:*
A. Control Environment
B. Risk Assessment
C. Monitoring
D. Information
*Answer: A*
46. *Fiduciary duty means:*
A. Act in own interest
B. Act in best interest of others
C. Maximize short-term profit
D. Avoid all risk
*Answer: B*
47. *Stakeholders include:*
A. Shareholders only
B. Shareholders, employees, customers, suppliers, community
C. Board only
D. Government only
*Answer: B*
48. *Code of Ethics addresses:*
A. Tax rates
B. Conflicts of interest, integrity, confidentiality
C. Product pricing
D. Dividends
*Answer: B*
49. *Enterprise Risk Management per COSO includes:*
A. Financial reporting only
B. Strategy, operations, reporting, compliance risks
C. IT risks only
D. Audit risks
*Answer: B*
50. *Tone at the top refers to:*
A. CEO salary
B. Ethical culture set by board & senior mgmt
C. Office design
D. Stock price
*Answer: B*
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*Section 5: Basic Finance Terms – 10 Qs*
51. *NPV > 0 means:*
A. Reject project
B. Accept – adds value
C. IRR < WACC
D. Payback not met
*Answer: B*
52. *WACC is:*
A. Cost of debt only
B. Weighted average cost of debt & equity
C. Return on assets
D. Dividend rate
*Answer: B*
53. *Current Ratio =*
A. Current Assets / Current Liabilities
B. Quick Assets / Current Liabilities
C. Total Debt / Equity
D. NI / Sales
*Answer: A*
54. *ROE =*
A. Net Income / Sales
B. Net Income / Total Assets
C. Net Income / Equity
D. EBIT / Assets
*Answer: C*
55. *Time value of money: $1 today > $1 future due to:*
A. Inflation + opportunity to earn
B. Tax
C. Accounting rules
D. Depreciation
*Answer: A*
56. *Bond price ↑ when interest rates:*
A. Increase
B. Decrease
C. Stay same
D. No relation
*Answer: B*
57. *Diversification reduces:*
A. Systematic risk
B. Unsystematic risk
C. Market risk
D. Interest rate risk
*Answer: B*
58. *Operating leverage high means:*
A. High variable costs
B. High fixed costs, EBIT sensitive to sales
C. Low risk
D. Low break-even
*Answer: B*
59. *Dividend payout ratio =*
A. Dividends / Net Income
B. Net Income / Dividends
C. Dividends / Sales
D. Retained Earnings / NI
*Answer: A*
60. *Treasury stock is:*
A. Stock owned by government
B. Company’s own stock repurchased
C. Preferred stock
D. Foreign stock
*Answer: B*
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*Section 6: AIS & Business Cycles Documents – 15 Qs*
61. *AIS stands for:*
A. Accounting Internal System
B. Accounting Information System
C. Audit Information Standard
D. Asset Inventory System
*Answer: B*
62. *Revenue cycle starts with:*
A. Cash receipt
B. Customer order
C. Invoice
D. Shipment
*Answer: B*
63. *Key document in revenue cycle:*
A. Purchase order
B. Sales order
C. Receiving report
D. Time card
*Answer: B*
64. *Bill of lading is prepared by:*
A. Customer
B. Carrier – proof of shipment
C. Sales dept
D. Accounting
*Answer: B*
65. *Remittance advice accompanies:*
A. Sales order
B. Customer payment
C. Purchase requisition
D. Invoice
*Answer: B*
66. *Purchase cycle starts with:*
A. Invoice from vendor
B. Purchase requisition
C. Payment
D. Receiving report
*Answer: B*
67. *PO stands for:*
A. Payment Order
B. Purchase Order
C. Production Order
D. Payroll Order
*Answer: B*
68. *Three-way match in purchase cycle:*
A. PO, Invoice, Check
B. PO, Receiving Report, Vendor Invoice
C. Requisition, PO, Invoice
D. Quote, PO, Payment
*Answer: B*
69. *Receiving report is prepared by:*
A. Purchasing dept
B. Receiving dept upon goods receipt
C. Vendor
D. Accounting
*Answer: B*
70. *Payroll cycle key document:*
A. Sales invoice
B. Time card/Time sheet
C. Purchase order
D. Packing slip
*Answer: B*
71. *W-4 form used for:*
A. Employee tax withholding info
B. Employer tax payment
C. Vendor payment
D. Customer credit
*Answer: A*
72. *Control in revenue cycle:*
A. No credit checks
B. Segregation: Order entry, credit, shipping, billing, cash
C. Same person ships & bills
D. No invoices
*Answer: B*
73. *Purchase cycle fraud red flag:*
A. Three-way match done
B. Vendor address = employee address
C. Approved PO
D. Receiving report signed
*Answer: B*
74. *Payroll fraud type:*
A. Kiting
B. Ghost employee
C. Lapping
D. Channel stuffing
*Answer: B*
75. *AIS output includes:*
A. Financial statements, management reports
B. Source documents only
C. Journal entries only
D. Bank statements
*Answer: A*
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*Section 7: Org Structure & Technology/Data Analytics – 25 Qs*
76. *Functional org structure groups by:*
A. Products
B. Function: Marketing, Finance, Production
C. Geography
D. Customers
*Answer: B*
77. *Matrix structure has:*
A. Single boss
B. Dual reporting – function & project
C. No hierarchy
D. Outsourced
*Answer: B*
78. *Span of control means:*
A. Number of levels
B. Number of subordinates per manager
C. Company size
D. Budget size
*Answer: B*
79. *Centralized decision making:*
A. Fast, local response
B. Decisions at top, consistent
C. Low control
D. Empowerment
*Answer: B*
80. *ERP system benefit:*
A. Data silos
B. Integrated database, real-time info
C. Manual entry
D. Multiple systems
*Answer: B*
81. *Database vs Spreadsheet: Database better for:*
A. Small ad-hoc analysis
B. Large volume, multi-user, data integrity
C. Charts
D. One-time calc
*Answer: B*
82. *Data warehouse is:*
A. Transaction processing
B. Central repository for analytics & reporting
C. Backup system
D. Email server
*Answer: B*
83. *Big Data 3 V’s:*
A. Value, Verify, Validate
B. Volume, Velocity, Variety
C. Visual, Verbal, Vital
D. Vendor, Version, View
*Answer: B*
84. *Descriptive analytics answers:*
A. What will happen?
B. What happened?
C. Why did it happen?
D. What should we do?
*Answer: B*
85. *Predictive analytics answers:*
A. What happened?
B. What will happen?
C. What should we do?
D. Why it happened?
*Answer: B*
86. *Prescriptive analytics answers:*
A. What happened?
B. What should we do?
C. What will happen?
D. Why it happened?
*Answer: B*
87. *RPA stands for:*
A. Risk Planning Analysis
B. Robotic Process Automation
C. Revenue Per Asset
D. Return on Process
*Answer: B*
88. *RPA best for:*
A. Judgment tasks
B. Repetitive, rule-based, high-volume tasks
C. Creative work
D. Strategy
*Answer: B*
89. *Data visualization tool example:*
A. Word
B. Tableau, Power BI
C. Outlook
D. Notepad
*Answer: B*
90. *Blockchain feature:*
A. Centralized
B. Immutable, distributed ledger
C. Easy to alter
D. Slow
*Answer: B*
91. *Cybersecurity CIA triad:*
A. Control, Insight, Audit
B. Confidentiality, Integrity, Availability
C. Cost, Income, Assets
D. Check, Inspect, Approve
*Answer: B*
92. *Phishing is:*
A. Hardware failure
B. Social engineering via fake emails
C. Software bug
D. Network speed issue
*Answer: B*
93. *Cloud computing benefit:*
A. High upfront cost
B. Scalability, pay-as-you-go
C. No internet needed
D. Less secure
*Answer: B*
94. *Data governance includes:*
A. Data quality, security, privacy, ownership
B. Only backups
C. Only reporting
D. Hardware purchase
*Answer: A*
95. *Structured data example:*
A. Emails
B. Database table with rows/columns
C. Video
D. Social media posts
*Answer: B*
96. *Unstructured data example:*
A. Excel table
B. PDF contract, images, audio
C. GL account list
D. Inventory master
*Answer: B*
97. *Dashboard key feature:*
A. 100 pages of data
B. Visual, KPI, real-time, drill-down
C. Text only
D. Annual only
*Answer: B*
98. *IT General Controls include:*
A. Input validation
B. Access security, change management, backup
C. Sales order entry
D. Payroll calc
*Answer: B*
99. *Application controls include:*
A. Firewall
B. Input edit checks, batch totals, reasonableness checks
C. Physical security
D. Backup
*Answer: B*
100. *Data mining is used to:*
A. Store data
B. Discover patterns/trends in large datasets
C. Delete data
D. Backup data
*Answer: B*
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*Answer Key*:
1B 2A 3B 4B 5B 6A 7C 8A 9B 10B 11B 12A 13B 14B 15B 16B 17B 18B 19B 20B 21B 22B 23B 24B 25B 26B 27B 28B 29D 30B 31B 32B 33B 34B 35A 36A 37B 38B 39B 40B 41B 42B 43B 44B 45A 46B 47B 48B 49B 50B 51B 52B 53A 54C 55A 56B 57B 58B 59A 60B 61B 62B 63B 64B 65B 66B 67B 68B 69B 70B 71A 72B 73B 74B 75A 76B 77B 78B 79B 80B 81B 82B 83B 84B 85B 86B 87B 88B 89B 90B 91B 92B 93B 94A 95B 96B 97B 98B 99B 100B
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