US CMA Part 1 - 100 MCQ , covering all topics , US GAAP Based.
*BUDGETARY CONTROL, VARIANCE, PERFORMANCE*
*1. Budgetary control variance analysis - A favorable materials price variance with unfavorable efficiency variance indicates?*
A) Higher price, less usage
B) Lower price but lower quality material bought
C) Standard price error
D) Idle capacity
*Answer: B*
*2. Learning Curve - If 80% learning curve, first unit 100 hrs, second unit will take?*
A) 80 hrs B) 60 hrs C) 100 hrs D) 160 hrs
*Answer: A - 100 x 80%*
*3. Labour efficiency variance is calculated as:*
A) (AH x AR) - (SH x SR) B) (AH - SH) x SR C) (AR - SR) x AH D) (AH - SH) x AR
*Answer: B*
*4. Expected Value - EVPI is?*
A) EV with perfect info - EV without info B) EVPI = Expected cost C) Minimum payoff D) Max regret
*Answer: A*
*5. ROI and RI - Division A ROI 15%, Cost of capital 10%, RI positive means?*
A) ROI < Cost of capital B) Project adds value C) Destroy value D) No decision
*Answer: B*
*6. ROI can be increased by?*
A) Increasing sales with same capital B) Increasing assets C) Decreasing margin D) All
*Answer: A*
*7. Throughput contribution = ?*
A) Sales - Direct Material B) Sales - Variable Cost C) Sales - Fixed Cost D) Sales - All costs
*Answer: A - Only truly variable is material in throughput costing*
*8. Control Charts - Upper and Lower control limits are used for?*
A) Spec limits B) Identify if process in statistical control C) Budget limits D) Audit sampling
*Answer: B*
*9. Supervariable costing treats?*
A) All costs as period B) Only DM as product cost C) DM+DL as product D) DM+DL+VOH
*Answer: B*
*10. Absorption vs Variable costing - When production > sales, profit under absorption is?*
A) Higher than variable B) Lower C) Same D) Zero
*Answer: A - Fixed OH deferred in inventory*
*11. Overapplied overhead means?*
A) Actual OH > Applied OH B) Applied OH > Actual OH C) Actual=Applied D) Budgeted > Actual
*Answer: B*
*12. Normal costing vs Standard costing:*
A) Normal uses actual DM,DL and budgeted OH rate B) Standard uses all budgeted C) Both same D) Normal uses actual OH
*Answer: A*
*13. High-Low method is used to?*
A) Separate mixed cost B) Value bonds C) Calculate EPS D) Audit opinion
*Answer: A*
*14. Cross-subsidization / Overcosting / Undercosting occurs due to?*
A) Single allocation base B) Use of ABC C) Learning curve D) EVPI
*Answer: A - Traditional costing overcosts high volume, undercosts low volume*
*15. Manufacturing vs Non-manufacturing overheads:*
A) MOH is inventoriable, Non-MOH is period B) Both inventoriable C) Both period D) None
*Answer: A*
*COST ALLOCATION, OVERHEADS, DECISION MAKING*
*16. Allocation of overheads - Most appropriate base for machine related OH?*
A) Direct labor hours B) Machine hours C) Direct material cost D) Sales
*Answer: B*
*17. Opportunity cost is?*
A) Sunk cost B) Benefit foregone from next best alternative C) Historical cost D) Fixed cost
*Answer: B*
*18. Economic cost includes?*
A) Only accounting cost B) Explicit + Implicit opportunity cost C) Only sunk D) Only variable
*Answer: B*
*19. Balanced Scorecard perspectives are?*
A) Financial, Customer, Internal Process, Learning & Growth B) ROI, RI, EVA, ABC C) Cost, Quality, Time, Flex D) Audit, Tax, Finance, HR
*Answer: A*
*20. Benchmarking is?*
A) Comparing with best-in-class B) Internal audit C) Standard costing D) Variance analysis
*Answer: A*
*21. Cost of Quality includes?*
A) Prevention, Appraisal, Internal Failure, External Failure B) Only failure C) Only prevention D) Variable cost only
*Answer: A*
*22. Operational Excellence focuses on?*
A) Low cost, efficiency, lean B) Product innovation C) Customer intimacy D) Risk taking
*Answer: A*
*23. Effectiveness vs Efficiency - Effectiveness is?*
A) Doing right things - achieving goals B) Doing things right C) Cost per unit D) ROI
*Answer: A*
*FINANCIAL ACCOUNTING & REPORTING - US GAAP*
*24. Cash Equivalent criteria per US GAAP:*
A) Short term, highly liquid, 3 months or less maturity B) 6 months C) 12 months D) Any liquid asset
*Answer: A*
*25. CFO, CFI, CFF - Interest received under US GAAP is?*
A) CFO B) CFI C) CFF D) Can be CFO or CFI under IFRS, but CFO under GAAP
*Answer: A*
*26. Income received from investment - Dividend received in cash flow US GAAP?*
A) CFO B) CFI C) CFF D) Non-cash
*Answer: A*
*27. Trading investment is classified at?*
A) Amortized cost B) Fair value through Net Income C) Equity method D) Cost
*Answer: B*
*28. Held-to-Maturity (HTM) investment is measured at?*
A) Fair value B) Amortized cost C) Lower of cost or market D) Equity
*Answer: B - Now called Held to collect under ASC 320*
*29. Available-for-Sale (AFS) investment - Now under US GAAP is?*
A) Fair value through OCI - Debt securities B) Amortized cost C) No such category for equity, all equity at FVNI D) Both A & C
*Answer: D - ASU 2016-01 removed AFS for equity*
*30. Investment in Associates 20-50% is accounted by?*
A) Equity method B) Consolidation C) Fair value D) Cost
*Answer: A*
*31. Impairment - Long-lived assets held for use test is?*
A) 2-step: Recoverability (Undiscounted CF vs Carrying), then Fair value B) One step C) Only discounted D) No impairment
*Answer: A*
*32. Wasting assets example:*
A) Mine, Oil reserve B) Building C) Patent D) Cash
*Answer: A - Depleted*
*33. Deferred Tax Asset arises when?*
A) Taxable temporary difference B) Deductible temporary difference / NOL C) Permanent difference D) None
*Answer: B*
*34. Deferred Tax Liability arises when?*
A) Book depreciation faster than tax B) Tax depreciation faster than book C) Warranty expense D) Bad debt
*Answer: B*
*35. Bond Valuation - Bond issued at discount means?*
A) Coupon rate < Market rate B) Coupon > Market C) Coupon = Market D) No relation
*Answer: A*
*36. Bond Amortization - Effective interest method interest expense = ?*
A) Carrying value x Market rate at issue B) Face x Coupon C) Face x Market D) Straight line
*Answer: A*
*37. Limitations of Balance Sheet - Does NOT include?*
A) Current value of most assets B) Off-balance items like operating lease previously C) Historical cost D) It includes everything
*Answer: D - BS doesn't show internally generated intangibles, current values*
*38. Operating Lease disclosure criteria ASC 842 now?*
A) ROU Asset and Lease Liability on BS B) Off balance C) Only footnote D) Only for finance lease
*Answer: A - All leases >12 months on BS*
*39. Revenue Recognition ASC 606 - 5 steps. First step is?*
A) Identify contract B) Identify performance obligation C) Determine price D) Recognize revenue
*Answer: A*
*40. Proforma Income Statement is prepared based on?*
A) Projected sales and assumptions B) Historical only C) Audited data D) Tax return
*Answer: A*
*41. Proforma Balance Sheet - AFN (Additional Funds Needed) formula depends on?*
A) Sales growth, spont. liabilities, profit margin B) Only assets C) Only debt D) Audit opinion
*Answer: A*
*42. Audit Opinion - Unmodified with going concern emphasis is?*
A) Unqualified with explanatory paragraph B) Qualified C) Adverse D) Disclaimer
*Answer: A*
*43. Notes to Accounts are?*
A) Integral part of financials, required for full disclosure B) Optional C) Only for public co D) Not audited
*Answer: A*
*44. EPS - Basic EPS = (Net Income - Preferred Div) / Weighted Avg Common Shares*
A) True B) False C) Includes dilutive D) Uses ending shares
*Answer: A*
*45. Diluted EPS includes?*
A) Convertible bonds, options, RSU if dilutive B) Only common shares C) Preferred only D) All securities anti-dilutive
*Answer: A*
*46. Tangible vs Intangible resources - Tangible is?*
A) Plant, Equipment B) Brand, Patent C) Goodwill D) Knowledge
*Answer: A*
*47. Smart Contract is?*
A) Self-executing code on blockchain B) Paper contract C) Audit contract D) Lease contract
*Answer: A*
*48. Long-lived assets held for sale are measured at?*
A) Lower of Carrying or Fair value less cost to sell, no depreciation B) Depreciated C) Amortized cost D) Fair value through income
*Answer: A*
*49. CFO calculation - Indirect method starts with?*
A) Net Income B) Sales C) Gross Profit D) Cash
*Answer: A*
*ADVANCED TOPICS*
*50. Expected Value - Project payoff 100 with 0.6, 50 with 0.4, EV = ?*
A) 80 B) 100 C) 50 D) 60
*Answer: A - 100_0.6 + 50_0.4*
*51. Internal Control limitations include?*
A) Collusion, Management override, Cost-benefit, Human error B) Perfect assurance C) No limitation D) Only IT issues
*Answer: A*
*52. COSO Principle - 5 components: Control Env, Risk Assessment, Control Activities, Info & Comm, Monitoring. Risk Assessment includes?*
A) Specifying objectives, assessing risks, fraud risk B) Only hiring C) Only reporting D) None
*Answer: A*
*53. Governance - Board's role is?*
A) Oversight, strategy, risk, protects shareholders B) Day to day ops C) Bookkeeping D) Selling
*Answer: A*
*54. Risk Assessment - Inherent risk vs Residual risk:*
A) Inherent before control, Residual after control B) Same C) Residual > Inherent D) None
*Answer: A*
*55. Technology & Data Analytics - Descriptive analytics tells?*
A) What happened B) What will happen C) Why happened D) What to do
*Answer: A*
*56. Predictive analytics uses?*
A) Regression, machine learning to forecast B) Only historical C) Only reporting D) Audit opinion
*Answer: A*
*57. Underapplied overhead adjusted at year end if immaterial goes to?*
A) COGS B) WIP, FG, COGS proportionally C) Inventory only D) OCI
*Answer: A - If material then prorate to WIP, FG, COGS*
*58. Absorption costing treatment of fixed MOH is?*
A) Product cost B) Period cost C) Always expense D) OCI
*Answer: A*
*59. Variable costing fixed MOH is?*
A) Period cost B) Product cost C) Inventory D) Asset
*Answer: A*
*60. Throughput costing is useful for?*
A) Short term bottleneck decisions B) Long term pricing C) External reporting GAAP D) Tax
*Answer: A*
*61. Preview Test / Pre-emptive test - Not in CMA but similar to?*
A) Prior probability revision B) Audit test C) Cash test D) Variance test
*Answer: A - Concept of information before decision*
*62. Overcosting and undercosting - Product diversity causes?*
A) Traditional system undercosts low volume complex products B) Overcosts simple high volume C) Both A&B D) No effect
*Answer: C*
*63. High-Low - Highest 10k units cost 50k, lowest 6k units cost 32k, variable per unit?*
A) $4.5 B) $5 C) $3.2 D) $4
*Answer: A - (50-32)/(10-6)=4.5*
*64. Proforma - Percentage of sales method - If sales increase 10%, A/R will?*
A) Increase 10% if tied to sales B) No change C) Decrease D) Zero
*Answer: A*
*65. Audit Opinion - Disclaimer means?*
A) Auditor unable to form opinion due to scope limitation B) Financials wrong C) Qualified D) Clean
*Answer: A*
*66. Benchmarking types: Internal, Competitive, Functional, Generic*
A) True B) False
*Answer: A*
*67. Balanced Scorecard - ROI is under which perspective?*
A) Financial B) Customer C) Internal D) Learning
*Answer: A*
*68. Cash equivalent does NOT include?*
A) 3-month T-bill B) 6-month bond C) Money market fund D) Commercial paper <3 months
*Answer: B*
*69. Control Chart - If point outside UCL/LCL, it is?*
A) Out of control, special cause investigation needed B) In control C) Ignore D) Common cause
*Answer: A*
*70. CFF includes?*
A) Dividends paid, issuance of stock, debt repayment B) Purchase of asset C) Sale of goods D) Interest paid
*Answer: A*
*71. CFI includes?*
A) Purchase/Sale of PPE, Investments B) Issuance of debt C) Net income D) Salaries
*Answer: A*
*72. Disclosure of operating lease criteria - Short term lease exemption <12 months can be off BS*
A) True under ASC 842 B) False C) Only finance D) Only operating >12 months off
*Answer: A*
*73. Revenue Recognition - Variable consideration is?*
A) Estimated using expected value or most likely amount B) Fixed C) Ignored D) Recognized later only
*Answer: A*
*74. Impairment of Intangible with indefinite life - Test at least?*
A) Annually B) Never C) Every 3 years D) Only when sold
*Answer: A*
*75. DTA valuation allowance is created when?*
A) More likely than not ( >50%) that some DTA not realizable B) Always C) Never D) Only for DTL
*Answer: A*
*76. Income from trading securities - Unrealized gain goes to?*
A) Income Statement B) OCI C) Retained Earnings direct D) No entry
*Answer: A*
*77. Income from AFS debt - Unrealized gain goes to?*
A) OCI B) Net Income C) COGS D) CFO
*Answer: A*
*78. COSO - Principle of Control Environment is?*
A) Integrity, ethics, Board oversight, org structure B) Only IT C) Only audit D) Risk only
*Answer: A*
*79. Notes to accounts include?*
A) Significant accounting policies, contingencies, related party B) Only cash C) Only sales D) Not required
*Answer: A*
*80. Technology - RPA is used for?*
A) Automating repetitive rule-based tasks B) Strategy C) Audit opinion D) Valuation
*Answer: A*
*81. Operation Excellency - Six Sigma focuses on?*
A) Reducing variation, defects <3.4 DPMO B) Increasing defects C) Marketing D) HR only
*Answer: A*
*82. Cost of Quality - External failure cost example?*
A) Warranty, returns, lawsuits B) Inspection C) Training D) Prevention
*Answer: A*
*83. Internal Failure cost is?*
A) Rework, scrap, downtime before shipment B) Warranty C) Training D) Appraisal
*Answer: A*
*84. Appraisal cost is?*
A) Inspection, testing B) Rework C) Warranty D) Training
*Answer: A*
*85. Prevention cost is?*
A) Training, quality planning, preventive maintenance B) Scrap C) Warranty D) Inspection
*Answer: A*
*86. Normal costing - Overapplied OH $5k immaterial, COGS before adjustment 100k, adjusted COGS?*
A) 95k B) 100k C) 105k D) 0
*Answer: A - Applied > Actual, so reduce COGS*
*87. Standard costing - Material price variance isolated at?*
A) Time of purchase B) Time of usage C) Year end D) Never
*Answer: A - For early control*
*88. Deferred Tax - Permanent differences create DTA/DTL?*
A) No B) Yes C) Sometimes D) Always DTL
*Answer: A - Only temporary differences*
*89. Bond - Face 1000, Coupon 8% semiannual, Market 10%, Price will be?*
A) <1000 B) >1000 C) =1000 D) 0
*Answer: A - Discount*
*90. Long-lived assets - Depreciation methods under US GAAP allowed?*
A) Straight line, units of production, DDB, SYD - any systematic rational B) Only SL C) Only tax method D) No depreciation
*Answer: A*
*91. Held to Maturity - If company sells more than insignificant amount, it taints portfolio*
A) True B) False C) No rule D) Only for trading
*Answer: A*
*92. ROI - DuPont formula ROI = Margin x Turnover*
A) True B) False
*Answer: A*
*93. RI = Operating Income - (Investment x Required Rate)*
A) True B) False
*Answer: A*
*94. Governance - SOX requires management assessment of internal controls*
A) True - Section 404 B) False C) Only auditors D) Voluntary
*Answer: A*
*95. Risk assessment - SWOT is tool for?*
A) Strength, Weakness, Opportunity, Threat analysis B) Costing C) Variance D) Audit
*Answer: A*
*96. CFO - Direct method shows?*
A) Cash collected from customers, cash paid to suppliers B) Net income C) Only non-cash D) Equity
*Answer: A*
*97. Cash Flow - Non-cash investing financing disclosed in?*
A) Notes / Separate schedule B) CFO C) No disclosure D) Income statement
*Answer: A*
*98. Smart Contract - In audit, risk is?*
A) Code vulnerability, oracle risk, immutability B) No risk C) Only paper risk D) Credit risk only
*Answer: A*
*99. Proforma - Which is last to be prepared?*
A) Proforma Balance Sheet after Income and Cash Budget B) Income first C) Sales budget first D) Production first
*Answer: A*
*100. Limitation of Balance Sheet - Does not show?*
A) Fair value of company, human resources, internally generated goodwill B) Cash C) Accounts payable D) Debt
*Answer: A*
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