100 QUESTIONS for US CMA Part 1 - All Types - Cost + Financial Accounting [US GAAP]

 

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

*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

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*Q2 FILL:* Cost function y = a + bX, 'a' stands for *__ and 'b' for *__.

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*Q3 T/F:* Relevant Range is the range where cost behavior assumptions remain valid.

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*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

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*Q5 ODD MAN OUT:* Direct Material, Direct Labour, Factory Rent, Sales Commission

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*Q6 NEGATIVE:* Which is NOT a factor of production?

A) Land B) Labour C) Capital D) Profit

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*Q7 MCQ:* Overcosting of a product results in:

A) Increase in sales B) Cross-subsidization C) Undercosting of other product D) Both B & C

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*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

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*Q9 MCQ:* Manufacturing overheads include:

A) Factory supervisor salary B) CEO salary C) Sales commission D) Interest

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*Q10 T/F:* Operating expenses are product costs.

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*Q11 FILL:* Cost Pool + ____ = Allocation base.

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*Q12 MCQ:* Opportunity cost is:

A) Recorded in books B) Potential benefit given up C) Sunk cost D) Historical cost

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*Q13 MCQ:* Sunk cost is:

A) Relevant for decision B) Irrelevant, already incurred C) Future cost D) Variable cost

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*Q14 NEGATIVE:* Which is NOT an Economic Cost?

A) Explicit + Implicit B) Accounting cost only C) Includes opportunity cost D) Includes normal profit

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*Q15 MCQ:* Explicit cost vs Implicit cost: Salary paid to owner who could work elsewhere is:

A) Explicit B) Implicit C) Sunk D) Fixed

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*Q16 MCQ:* Short-run period in economics means:

A) All factors variable B) At least one factor fixed C) 1 year D) 6 months

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*Q17 MCQ:* Relevant Cost for decision making must be:

A) Future, differential, cash flow B) Past cost C) Sunk cost D) Allocated fixed cost

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*Q18 ODD MAN OUT:* Cost reduction, Cost control, Cost cutting, Cost reporting

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*Q19 MCQ:* Responsibility of HR/Personnel dept vs Payroll dept:

A) HR hires, Payroll pays B) Both same C) HR pays D) Payroll hires

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*Q20 MCQ:* Job order costing is suitable for:

A) Oil refinery B) Custom furniture C) Chemicals D) Cement

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*Q21 FILL:* Process costing uses ____ report.

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*Q22 MCQ:* Operation Excellence = Efficiency + *__ + *__?

A) Effectiveness & Economy B) Profit & Loss C) Cost & Revenue D) None

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*Q23 MCQ:* Under Variable Costing, fixed MOH is:

A) Product cost B) Period cost C) Part of inventory D) Deferred

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*Q24 MCQ:* Under Absorption Costing, gross profit = Sales - ?

A) Variable cost B) COGS including fixed MOH C) Contribution D) Prime cost

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*Q25 MCQ:* Super-variable costing treats ____ as only variable?

A) Direct Material B) Direct Labour C) Overhead D) All

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*Q26 T/F:* Contribution Margin = Sales - Variable Cost, Gross Margin = Sales - COGS.

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*Q27 MCQ:* If Mark-up on Cost is 25%, Profit on Sales is:

A) 25% B) 20% C) 30% D) 15%

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*Q28 MCQ:* Cost behavior: y = $5000 + $10X, at 100 units total cost?

A) $6000 B) $5000 C) $1000 D) $10

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*Q29 MCQ:* Step Fixed Cost example:

A) Supervisor salary when shift increases B) Electricity C) Material D) Commission

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*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

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*Q31 ODD MAN OUT:* Cost Unit, Cost Driver, Cost Object, Cost of Living

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*Q32 MCQ:* Activity & Activity Cost - In ABC, activity cost is:

A) Direct cost B) Overhead grouped by activity C) Prime cost D) Sunk

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*Q33 T/F:* Normal spoilage cost is added to good units, abnormal spoilage is loss.

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*Q34 MCQ:* Journal: Abnormal spoilage disposition:

A) Dr. COGS B) Dr. Loss - Abnormal Spoilage Cr. WIP C) Dr. FG D) No entry

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*Q35 FILL:* Theoretical Capacity - Maintenance - holidays = ____ Capacity.

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*Q36 MCQ:* Raw material procurement documents include:

A) Purchase Requisition, PO, GRN, Invoice B) Only Invoice C) Only PO D) None

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*Q37 MCQ:* Overapplied overhead means:

A) Actual > Applied B) Applied > Actual C) Equal D) Zero

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*Q38 MCQ:* Underapplied overhead treatment: If immaterial:

A) Close to COGS B) Prorate to WIP, FG, COGS C) Carry forward D) Ignore

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*Q39 MCQ:* Cost tracing vs Allocation: Direct material is:

A) Traced B) Allocated C) Apportioned D) Reapportioned

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*Q40 MCQ:* Apportionment vs Reapportionment:

A) Apportionment primary distribution, Reapportionment secondary B) Same C) Reverse D) None

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*Q41 T/F:* Prime Cost = Direct Material + Direct Labour.

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*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

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*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? 

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*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

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*Q45 FILL:* COGS = Beginning FG + Cost of Goods Manufactured - ____.

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*Q46 MCQ:* Committed vs Discretionary Fixed Cost: Property tax is:

A) Committed B) Discretionary C) Variable D) Semi-variable

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*Q47 NEGATIVE:* Which is NOT a manufacturing department function?

A) Production planning B) Quality control C) Selling product D) Maintenance

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*Q48 MCQ:* Skilled vs Unskilled labour: Skilled labour cost is usually:

A) Higher, direct B) Lower C) Period D) Overhead always

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*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

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*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

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*Q51 MCQ:* Journal: WIP to FG:

A) Dr. FG Cr. WIP B) Dr. WIP Cr. FG C) Dr. COGS Cr. FG D) Dr. RM

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*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

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*Q53 ODD MAN OUT:* Cost Pool, Cost Driver, Cost Tracing, Cost of Goods Sold

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*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

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*Q55 NEITHER/NOR:* Neither Job Costing nor Process Costing uses:

A) DM B) DL C) Standard costing D) Neither uses ____? Trick.

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*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

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*Q57 T/F:* Cost control is proactive, cost reduction is reactive and permanent.

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*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

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*Q59 FILL:* At Least one cost is fixed in short-run, All costs are ____ in long-run.

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*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

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*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

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*Q62 T/F:* Non-current assets include Property, Plant, Equipment, Intangibles, Long-term investments.

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*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

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*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

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*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

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*Q66 MCQ:* Other Comprehensive Income includes:

A) Unrealized gain on AFS Debt, Foreign currency translation, Pension adjustments B) Net Income C) Dividend D) Cash

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*Q67 MCQ:* Reclassification of OCI to Income Statement is called:

A) Recycling B) Amortization C) Realization D) Closing

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*Q68 T/F:* Small stock dividend <20-25%, Large stock dividend >25%.

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*Q69 MCQ:* Small stock dividend recorded at:

A) Fair Value B) Par Value C) No entry D) Book value

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*Q70 MCQ:* Large stock dividend recorded at:

A) Par Value B) Fair Value C) Zero D) Market

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*Q71 MCQ:* Treasury Stock is:

A) Contra Equity, debit balance, reduces equity B) Asset C) Liability D) Gain

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*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

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*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

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*Q74 ODD MAN OUT:* Trading, HTM, AFS Debt, Equity Method

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*Q75 MCQ:* Trading Investment unrealized goes to:

A) Net Income B) OCI C) Nowhere D) Equity directly

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*Q76 MCQ:* HTM Investment is measured at:

A) Amortized Cost B) FV C) Lower of cost or market D) NRV

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*Q77 MCQ:* AFS Debt Investment unrealized goes to:

A) OCI B) Net Income C) Retained Earnings D) Asset

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*Q78 MCQ:* Investment in Associate 20-50% uses:

A) Equity Method B) FV-NI C) HTM D) Consolidation

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*Q79 MCQ:* Investment in Subsidiary >50% uses:

A) Consolidation B) Equity Method in consolidated books C) FV D) Cost

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*Q80 T/F:* Goodwill is amortized under US GAAP.

*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

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*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

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*Q83 MCQ:* Sum-of-Year-Digit: Life 4 years. Year 1 fraction?

A) 4/10 B) 3/10 C) 1/4 D) 4/5

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*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

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*Q85 MCQ:* Indirect Method starts with:

A) Net Income B) Sales C) Cash D) Gross Profit

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*Q86 FILL:* CFF = Financing, CFI = Investing, CFO = Operating. C&CE = ____?

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*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%

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*Q88 MCQ:* Depletion method used for:

A) Wasting assets / Natural resources B) Building C) Patent D) Goodwill

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*Q89 MCQ:* Amortization of Intangible with finite life:

A) Over useful life, usually straight-line B) Not amortized C) DDB D) SYD only

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*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.

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*Q91 MCQ:* Which is Wasting Asset?

A) Patent B) Timberland C) Building D) Goodwill

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*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

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*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

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*Q94 MCQ:* Small & Large Stock Dividend difference impacts:

A) Retained Earnings amount B) Total equity C) Cash D) Liability

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*Q95 FILL:* Premium on bonds for HTM debt is amortized using ____ method.

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*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

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*Q97 ODD MAN OUT:* Current Assets, Non-Current Assets, Fixed Assets, Revenue

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*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

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*Q99 MCQ:* Presentation & Disclosure requires:

A) Comparative statements, Consistency, Full disclosure B) Only one year C) No notes D) Only cash basis

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*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

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