US CMA Case-Based Practice Set - Batch 1 of 5
*Topic 1: Investment in Associates*
*Case*: MedCorp owns 30% of BioTech and has significant influence but not control. BioTech reports net income of $2M and pays $500K dividends. MedCorp purchased the stake for $6M.
*Q*: What is MedCorp’s investment balance at year-end using equity method?
*A*:
*Topic 2: Investment in Subsidiary vs Trading*
*Case*: Parco owns 80% of Subco. It also bought 2% of TechCo as short-term trading. Subco’s NI = $1M. TechCo FMV increased $20K.
*Q*: How does Parco report Subco vs TechCo income?
*A*:
*Topic 3: HTM vs Available for Sale*
*Case*: BankCo buys 5-yr bonds for $95K, intends to hold to maturity. Market value at YE = $98K. If classified AFS instead, how does $3K affect statements?
*A*:
*Topic 4: Operating vs Finance Lease - US GAAP*
*Case*: LeaseCo signs 4-yr lease for equipment. FV = $100K, PV of payments = $95K, useful life 5 yrs. No ownership transfer.
*Q*: Finance or operating lease? Why?
*A*:
*Topic 5: Revenue Recognition - US GAAP 5-Step*
*Case*: SoftwareCo sells license + 1yr support for $120K, no separate prices. SSP: License $100K, Support $40K.
*Q*: How much revenue at delivery of license?
*A*:
*Topic 6: Cash Flow Statement - US GAAP*
*Case*: Net Income $200K, Depr $50K, A/R ↑$30K, Inventory ↓$10K, A/P ↓$15K, Equip purchase $100K, Dividend paid $40K.
*Q*: CFO, CFI, CFF?
*A*
*Topic 7: Internal Control - Limitations*
*Case*: CEO overrides segregation of duties to approve $2M payment. Fraud occurs.
*Q*: Which IC limitation does this show?
*A*:
*Topic 8: Gross Profit Ratio & EPS*
*Case*: Sales $1M, COGS $600K, NI $150K, 100K shares, 20K convertible bonds at $50, 8% rate, tax 25%.
*Q*: GPR and Diluted EPS?
*A*:
*Topic 9: Property Dividend & Stock Split*
*Case*: Co declares 10% property dividend, FMV $200K, book $150K. Later does 2-for-1 stock split when 1M shares @ $50 out.
*Q*: Impact on RE and shares out?
*A*:
*Topic 10: Contingency & Purchase Commitment*
*Case*: Lawsuit probable, estimate $300K-$500K. Also signed PO for $1M inventory, FMV now $800K.
*Q*: What to accrue?
*A*: *
*Topic 11: Job Order vs Process Costing*
*Case*: CustomHome builds 5 unique houses. PaintCo makes 1M gallons.
*Q*: Which costing system for each?
*A*:
*Topic 12: Absorption vs Variable Costing*
*Case*: Produced 10K, sold 8K. DM $5, DL $3, VOH $2, FOH $50K total. Sell $20.
*Q*: NI under absorption vs variable?
*A*:
*Topic 13: Labor Efficiency & VOH Efficiency Variance*
*Case*: Std: 2 hrs @ $20. Actual: 1,800 hrs for 1,000 units, rate $21. VOH rate $5/hr.
*Q*: LEV and VOHEV
A
*Topic 14: ROI vs RI*
*Case*: Division NI $500K, Assets $2M, Corp WACC 10%.
*Q*: ROI and RI?
A
*Topic 15: Responsibility Centers*
*Case*: Plant manager controls costs but not sales price or investment.
*Q*: What type of center?
*A*
*Batch 2 of 5: 20 more CMA case-based questions* 👇
*US CMA Case-Based Practice Set - Batch 2*
*Topic 16: Data Mining & Data Analytics*
*Case*: RetailCo has 5M transactions. Internal audit wants to find duplicate vendor payments. Data analyst runs Benford’s Law test + duplicate invoice search on ERP data.
*Q*: What is this activity called in IMA terms?
*A*:
*Topic 17: Integrated Reporting - 6 Capitals*
*Case*: SustainCo’s annual report shows impact on natural, human, social, manufactured, intellectual, and financial capital.
*Q*: What reporting framework is this?
*A*:
*Topic 18: Proprietary Theory vs Entity Theory*
*Case*: SubCo 80% owned by ParCo earns $1M. Under proprietary theory, what NI does ParCo report from SubCo?
*A
*Topic 19: Wasting Assets*
*Case*: OilCo buys oil field for $10M, est. 1M barrels. Year 1 extracted 200K barrels.
*Q*: Depletion expense and classification?
*A*:
*Topic 20: Prepayment vs Accrual - US GAAP*
*Case*: Dec 31: Paid $12K rent for Jan-Mar next year. Also owe $5K wages for Dec, paid Jan 5.
*Q*: Journal impact on Dec 31 statements?
A..
*Topic 21: Basis of Apportionment & Reapportionment*
*Case*: Service dept HR $200K serves Production A 60% and B 40%. Maintenance $150K allocated by machine hours: A 1000, B 2000.
*Q*: Total OH to Dept B?
*A*:
*Topic 22: Capital Maintenance - Financial vs Physical*
*Case*: Co starts with $500K net assets. Inflation 10%. Year-end net assets $540K at historical cost, $600K at current cost.
*Q*: Is capital maintained under financial concept?
*A*:
*Topic 23: Liquidity, Solvency, Leverage Ratios*
*Case*: CA $300K, CL $200K, Total Debt $400K, Equity $600K, EBITDA $150K, Interest $30K.
*Q*: Current ratio, Debt/Equity, Interest Coverage?
*A*:
*Topic 24: Capital Structure Decision*
*Case*: Co EBIT $500K, can raise $1M via 10% debt or equity. Tax 25%, shares 100K now.
*Q*: Which gives higher EPS? Indifference point?
*A*:
*Topic 25: Cash Equivalent vs Current Asset*
*Case*: Co holds: T-bill 60 days $50K, A/R $100K, Equity shares $80K, Cash $20K.
*Q*: Total cash + cash equivalents?
*A*:
*Topic 26: Value for Money - 3Es*
*Case*: Govt dept cut program cost 20% but service users dropped 30%.
*Q*: Assess Economy, Efficiency, Effectiveness.
*A*:
*Topic 27: Risk Assessment - COSO*
*Case*: Audit finds inventory theft risk. Mgmt implements cycle counts + camera, reduces likelihood from High to Low.
*Q*: What risk response is this?
*A*
*Topic 28: Corporate Governance - Board Role*
*Case*: Board has 8 members: 5 independent, separate Chair/CEO, audit committee 100% independent.
*Q*: Which governance best practices are met?
*A*:
*Topic 29: Accounting Information System - Controls*
*Case*: System auto-matches PO-Receipt-Invoice before payment. Clerk cannot override.
*Q*: What type of AIS control?
A..
*Topic 30: Types of Cost - Relevant vs Sunk*
*Case*: Machine book value $80K, can sell for $50K or modify for $30K to use. New machine $100K.
*Q*: Which costs are relevant to replace decision?
*A*:
*Topic 31: Cost Assignment vs Cost Allocation*
*Case*: Direct materials $20K traced to Job 101. Factory rent $200K split to depts by sqft.
*Q*: Identify assignment vs allocation.
*A*:
*Topic 32: Efficiency vs Effectiveness - Operations*
*Case*: Plant made 10K units at std cost, but only 7K met quality. Budget was 9K good units.
*Q*: Efficient? Effective?
*A*: *
*Topic 33: Labor Efficiency Variance - Revised*
*Case*: Std 3 hrs/unit, 500 units. Actual 1,600 hrs, rate $18, std rate $20.
*Q*: LEV and rate variance?
*A*:
*Topic 34: Variable OH Efficiency Variance*
*Case*: VOH rate $4/hr, same hours as labor above.
*Q*: VOHEV?
*A*:
*Topic 35: Strategic Management - SWOT*
*Case*: Co has strong brand = S, but high debt = W, new market opening = O, new regulation = T.
*Q*: What strategy for S+O combo?
*A*
*Batch 3 of 5: 20 more CMA case-based questions* 💪
*US CMA Case-Based Practice Set - Batch 3*
*Topic 36: Internal Control - COSO 5 Components*
*Case*: Audit finds company has strong tone at the top, risk assessment matrix, authorization limits, monthly variance review, and whistleblower hotline monitored by internal audit.
*Q*: Which COSO component is the hotline?
*A*:
*Topic 37: COSO 17 Principles - Principle 11*
*Case*: IT dept implements access controls, change management, and backup procedures for ERP.
*Q*: Which COSO principle does this satisfy?
*A*:
*Topic 38: Limitations of Internal Control*
*Case*: Two warehouse staff collude to steal inventory and bypass counts. Controls existed but failed.
*Q*: What IC limitation is this?
*A*:
*Topic 39: Data Integration - ERP*
*Case*: Sales order auto-creates AR entry, reduces inventory, and posts COGS without manual entry.
*Q*: What benefit of AIS/ERP is shown?
*A*:
*Topic 40: Technology Controls - Input/Processing/Output*
*Case*: System rejects invoice date > today, calculates tax automatically, and prints exception report for variances >5%.
*Q*: Identify control type for each.
*A*:
*Topic 41: ROI Manipulation*
*Case*: Division A ROI = 20%. Mgr can invest in project: NI $50K, Assets $400K. Corp hurdle 12%.
*Q*: Will mgr accept? Why is ROI flawed here?
*A*:
*Topic 42: Residual Income - Pitfall*
*Case*: Division RI = $200K using 10% charge. Assets include $1M idle land. Without land, RI = $300K.
*Q*: What RI problem is shown?
*A*:
*Topic 43: Responsibility Accounting - Controllable Costs*
*Case*: Plant mgr charged with head office legal fees allocated by sales. Mgr cannot influence legal.
*Q*: Should legal be in mgr’s performance report?
*A*:
*Topic 44: Transfer Pricing - Goal Congruence*
*Case*: Division S makes parts at variable $20, market $35. Division B buys. If transfer = $20, S loses motivation. If $35, B buys outside.
*Q*: Best transfer price range for goal congruence?
*A*:
*Topic 45: Types of Responsibility Centers*
*Case*: R&D dept has $2M budget, no revenue. Sales dept has revenue target but no cost control. Hotel unit controls profit.
*Q*: Identify each center type.
*A*
*Topic 46: Strategic Management - Porter’s 5 Forces*
*Case*: New startup in airline industry. High capital, strong brand loyalty to incumbents, limited suppliers, price-sensitive customers.
*Q*: Which 2 forces are most unfavorable?
*A*:
*Topic 47: Value Chain Analysis*
*Case*: Co finds inbound logistics cost 30% above competitor due to 10 suppliers vs 2.
*Q*: Which primary activity needs improvement?
*A*
*Topic 48: Corporate Governance - SOX 404*
*Case*: CEO/CFO must certify financials and mgmt must assess IC over financial reporting. Auditor attests.
*Q*: What SOX section is this?
*A*:
*Topic 49: Risk Assessment - Inherent vs Residual*
*Case*: Cyber risk likelihood High, impact High before controls. After firewall + training, likelihood Low, impact Medium.
*Q*: Identify inherent vs residual risk.
*A*:
*Topic 50: Accounting Information System - Segregation of Duties*
*Case*: Same clerk approves PO, receives goods, and approves payment.
*Q*: Which SOD conflict exists? Fix?
*A*:
*Topic 51: Absorption Costing - Income Effect*
*Case*: Production > Sales by 2,000 units. FOH rate $6/unit. Variable NI = $100K.
*Q*: Absorption NI?
*A*:
*Topic 52: Capital Structure - WACC*
*Case*: 60% debt at 6%, 40% equity at 14%, tax 25%.
*Q*: WACC?
*A*:
*Topic 53: Proprietary Theory - Balance Sheet Equation*
*Case*: Assets $1M, Liab $400K.
*Q*: Equity under proprietary theory emphasis?
*A*
*Topic 54: Cash Equivalent Criteria - US GAAP*
*Case*: Co buys 120-day CD, 2-year bond, money market fund with 1-day liquidity.
*Q*: Which are cash equivalents?
*A*:
*Topic 55: Strategic Management - BCG Matrix*
*Case*: Product A: High market share, low growth. Product B: Low share, high growth.
*Q*: Classify each + strategy.
*A*:
*Batch 4 of 5: 20 more CMA case-based questions* 🚀
*US CMA Case-Based Practice Set - Batch 4*
*Topic 56: Finance Lease ASC 842 - Short Term Exemption*
*Case*: Co leases copier for 11 months, $500/month, no purchase option. PV of payments = $5,300, FV = $6,000.
*Q*: Finance or operating? How recorded?
*A*:
*Topic 57: Revenue - Variable Consideration*
*Case*: Contract $1M + bonus $100K if completed by Dec 31. Co estimates 70% chance of earning bonus. Most likely amount.
*Q*: Transaction price at inception?
*A*: *
*Topic 58: Revenue - Sales with Right of Return*
*Case*: Sold 1,000 units @ $50. Historically 5% returned. Cost $30/unit.
*Q*: Revenue, COGS, and refund liability at sale?
*A*:
*Topic 59: Cash Flow - Direct Method CFO*
*Case*: Sales $800K, A/R increased $40K, COGS $500K, Inventory decreased $20K, A/P increased $10K, Op Exp $150K, Wages Pay decreased $5K.
*Q*: CFO using direct method?
*A*: *
*Topic 60: Integrated Reporting - Manufactured Capital*
*Case*: Co builds new plant $20M, increasing production capacity 25%, but old plant impaired $5M.
*Q*: Net impact on manufactured capital in <IR>?
*A*:
*Topic 61: Wasting Assets - Timber*
*Case*: Timberland $2M, est. 500K board feet. Cut 80K feet yr1. Replanting costs $100K expensed.
*Q*: Depletion expense yr1?
*A*: *
*Topic 62: Service Dept Apportionment - Reciprocal Method*
*Case*: HR serves Maint 20%, Prod 80%. Maint serves HR 10%, Prod 90%. HR cost $100K, Maint $200K.
*Q*: Total cost allocated to Prod using reciprocal?
*A*:
*Topic 63: EVA vs RI*
*Case*: NOPAT $600K, WACC 10%, Capital $5M, Accounting NI $500K.
*Q*: EVA and RI? Difference?
*A*:
*Topic 64: Transfer Pricing - Dual Pricing*
*Case*: Sell division transfers at $30 = full cost. Buy division charged $30 but sell division credited at $35 market.
*Q*: What TP method? Impact?
*A*:
*Topic 65: ABC Costing*
*Case*: Two products: A 1K units, 10 setups. B 9K units, 10 setups. Setup cost pool $100K.
*Q*: Setup cost per unit using ABC vs traditional volume?
*A*: *
*Topic 66: Absorption Costing - Production = Sales*
*Case*: Produced & sold 5K. FOH $30K, V cost/unit $12, Sell $25.
*Q*: NI under both methods?
*Topic 67: Labor Rate Variance - Cause*
*Case*: LRV = $3,000 U. Investigation: had to use higher-skilled workers due to rush order.
*Q*: Is variance controllable? Who’s responsible?
*A*: *
*Topic 68: Corporate Governance - Agency Problem*
*Case*: CEO buys corporate jet for “client meetings” but uses 80% personal. Shareholders bear cost.
*Q*: What governance issue? Fix?
*A
*Topic 69: Risk Assessment - Risk Map*
*Case*: Risk A: High likelihood, Low impact. Risk B: Low likelihood, High impact.
*Q*: Which to prioritize for mitigation?
*A*:
*Topic 70: AIS - Database Controls*
*Case*: System requires customer ID to exist in master file before invoice created.
*Q*: What control?
*A*:
*Topic 71: Efficiency Variance - Overhead*
*Case*: Fixed OH budgeted $100K for 10K hrs. Actual $102K, actual hrs 11K, std hrs for output 10.5K.
*Q*: FOH volume variance?
*A*:
*Topic 72: Responsibility Center - Investment Center*
*Case*: Division mgr controls sales, costs, and decides to buy new $2M machine.
*Q*: What center type? Best measure?
*A*: *
*Topic 73: Capital Maintenance - Physical*
*Case*: Start: 100 machines. End: 95 machines + cash $200K. 5 machines cost $50K each to replace.
*Q*: Is physical capital maintained?
*A*:
*Topic 74: Contingency - Gain*
*Case*: Co sues vendor, legal says win is probable for $1M. No settlement yet.
*Q*: Record gain?
*A*:
*Topic 75: Strategic Management - Differentiation vs Cost Leadership*
*Case*: Co spends heavy on R&D, charges premium, targets quality buyers. Competitor uses basic tech, low price, high volume.
*Q*: Identify each strategy.
*A*:
*Final Batch 5 of 5: Last 25 CMA case-based questions* to hit 100/100 🎯
*US CMA Case-Based Practice Set - Batch 5*
*Topic 76: Operating Leverage*
*Case*: Co A: CM 60%, Fixed costs $300K. Co B: CM 30%, Fixed costs $100K. Both have sales $1M.
*Q*: Which has higher DOL? If sales ↑10%, NI change for each?
*A
*Topic 77: EBIT-EPS Indifference Point*
*Case*: Current: 100K shares, no debt. Plan: Issue $1M debt at 8% or 50K new shares. Tax 25%.
*Q*: At what EBIT are EPS same under debt vs equity?
*A*:.
*Topic 78: Property Dividend - Journal Entries*
*Case*: Declared land as dividend. Book $120K, FMV $200K on declaration, $210K on distribution.
*Q*: Entries on declaration & distribution dates?
*A*: *
*Topic 79: Stock Split vs Stock Dividend*
*Case*: 100K shares, $10 par, $50 market. Board does 2-for-1 split vs 100% stock dividend.
*Q*: Impact on RE, par, shares?
*A*:
*Topic 80: Cash Equivalents - Commercial Paper*
*Case*: On Dec 31, Co holds: 60-day CP $40K, 120-day CD $30K, Money Market $25K.
*Q*: Total cash equivalents?
*A*: .
*Topic 81: Purchase Commitment - Loss Recognition*
*Case*: Nov 1: Signed non-cancelable PO for 10K units @ $15. Dec 31: Market = $12. No units received yet.
*Q*: US GAAP treatment at 12/31?
*A*: *
*Topic 82: Integrated Reporting - Trade-offs*
*Case*: Co invests $5M in training: Financial capital ↓$5M, Human capital ↑, future Financial capital ↑ est $8M.
*Q*: How <IR> shows this?
*A*:
*Topic 83: Proprietary vs Entity - Consolidated NI*
*Case*: P owns 80% S. S NI = $100K. No intercompany.
*Q*: Consolidated NI under each theory?
*A*:
*Topic 84: Depreciable vs Wasting Asset*
*Case*: Asset A: Factory building $1M/20yr. Asset B: Gold mine $1M/100K oz.
*Q*: Depreciation vs depletion method?
*A*:
*Topic 85: Job Order Costing - Over/Underapplied OH*
*Case*: Actual OH $220K, Applied OH = $200K based on 10K DLH × $20/hr.
*Q*: Amount & disposal if immaterial?
*A*: *
*Topic 86: Process Costing - EUP FIFO*
*Case*: BWIP: 1K units 40% done. Started 9K. EWIP: 2K units 30% done. Costs: BWIP $4K, Added $76K.
*Q*: EUP for costs added this period?
*A*:
*Topic 87: Strategic Management - GE McKinsey Matrix*
*Case*: BU has Medium industry attractiveness, High business strength.
*Q*: GE matrix quadrant & strategy?
*A*:
*Topic 88: ROI vs RI - Behavioral*
*Case*: Division ROI = 25%, Corp hurdle = 15%. New project ROI = 18%, $500K investment.
*Q*: Will mgr take under ROI? Under RI? What’s best for corp?
*A*:
*Topic 89: Absorption Costing - Production < Sales*
*Case*: Beg Inv 3K units with $6/unit FOH. Produced 7K, sold 9K. Variable NI = $80K.
*Q*: Absorption NI?
*A*: *
*Topic 90: Cash Flow - Bond Issued at Discount*
*Case*: Issued $1M bond for $950K cash. Interest paid $60K.
*Q*: CFF and CFO impact?
*A*:
*Topic 91: Data Analytics - Predictive*
*Case*: Using 3 yrs sales + weather + promo data to forecast Q4 sales with regression model.
*Q*: What type of analytics?
*A*: *
*Topic 92: Internal Control - Detective vs Preventive*
*Case*: Bank reconciliation vs pre-numbered POs.
*Q*: Classify each.
*A*: *
*Topic 93: Capital Structure - Financial Leverage*
*Case*: EBIT $200K. Plan A: No debt. Plan B: $500K debt @ 10%. Tax 25%, 100K shares.
*Q*: DFL at EBIT $200K for Plan B?
*A*:
*Topic 94: Revenue - Principal vs Agent*
*Case*: Website sells tickets, remits 90% to venue, keeps 10%. Venue sets price, website not responsible if event cancels.
*Q*: Recognize gross or net?
*A*: *
*Topic 95: Liquidity vs Solvency*
*Case*: Co has Current Ratio 0.8 but D/E 0.2 and huge cash reserves in long-term investments.
*Q*: Liquidity problem or solvency problem?
*A*: *
*Topic 96: Cost Assignment - Direct vs Indirect*
*Case*: CEO salary $400K. Factory supervisor $90K for Product Line X only.
*Q*: Classify each for Product Line X.
*A*:
*Topic 97: Efficiency - Labor vs Machine*
*Case*: Std: 2 labor hrs + 1 machine hr per unit. Actual for 1K units: 2,200 LH, 900 MH.
*Q*: Which was efficient?
*A*: *
*Topic 98: Value for Money Audit*
*Case*: Govt built 10 schools for $10M, same quality as benchmark $12M, enrollment targets met.
*Q*: Was it VFM?
*A*:
*Topic 99: Integrated Reporting - Social & Relationship Capital*
*Case*: Co spent $1M on community programs, customer satisfaction ↑15%, NPS now 60.
*Q*: Which capital increased?
*A*:
*Topic 100: Ethics - IMA Statement*
*Case*: CMA asked by boss to defer expense to next quarter to hit bonus target. Refuses, reports to audit committee.
*Q*: Which IMA ethical standards applied?
*A
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