Here are *100 US CMA Part 1 Financial Accounting MCQs , covering all topics you listed. Organized by concept for fast revision.
Section 1…Basic accounting concepts:basic concept-based questions with answers on Financial Reporting (US CMA Part 1 level)—clear, exam-focused, and conceptual:
1. What is the primary objective of financial reporting?
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2. Which standard-setting body governs US financial reporting?
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3. What are the four primary financial statements?
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4. What is the accounting equation?
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5. What is the difference between accrual basis and cash basis accounting?
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6. What is revenue recognition under US GAAP?
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7. What is the purpose of the statement of cash flows?
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8. What is materiality in financial reporting?
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9. What is conservatism (prudence) concept?
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10. What is the difference between current and non-current assets?
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*Section 2: Leases – ASC 842 – 10 Qs*
*Q11*: Lessee signs 5-yr lease, PV of payments $100,000. No ownership transfer.
*Q*: Balance Sheet Day 1?
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*Q12*: Finance lease: Payment $25,000/yr, Interest yr1 $8,000.
*Q*: Yr1 lease expense?
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*Q13*: Operating lease: Straight-line expense $25,000/yr.
*Q*: Yr1 interest $8,000. Amortization?
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*Q14*: Short-term lease 11 months.
*Q*: B/S treatment?
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*Q15*: Lessee pays $5,000 initial direct costs.
*Q*: Add to ROU Asset?
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*Q16*: Lease with purchase option reasonably certain.
*Q*: Classify?
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*Q17*: Lessor, operating lease.
*Q*: Income recognition?
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*Q18*: Sale-leaseback, not a sale under ASC 606.
*Q*: Treatment?
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*Q19*: Variable lease payment based on sales.
*Q*: Include in lease liability?
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*Q20*: Discount rate: lessee doesn’t know implicit rate.
*Q*: Use?
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*Section 3: Income Taxes – DTA/DTL – 10 Qs*
*Q21*: Pretax book income $100,000. Tax depreciation > book by $20,000. Tax rate 25%.
*Q*: DTL?
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*Q22*: Warranty expense book $30,000, tax $0. Tax rate 25%.
*Q*: DTA?
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*Q23*: Permanent difference: Municipal bond interest $10,000.
*Q*: DTA/DTL?
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*Q24*: NOL carryforward $50,000. Tax rate 25%. More likely than not 100% realizable.
*Q*: DTA?
*Answer
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*Q25*: Valuation allowance needed if:
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*Q26*: Tax rate enacted 30% to 25% next year. Existing DTL $15,000 based on 30%.
*Q*: New DTL?
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*Q27*: Fines paid $5,000, non-deductible.
*Q*: Temporary or Permanent?
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*Q28*: Installment sale: Book recognizes all yr1, tax recognizes yr2.
*Q*: DTL or DTA yr1?
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*Q29*: Unrealized loss on AFS securities $40,000, tax 25%.
*Q*: DTA where recorded?
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*Q30*: Deferred tax classification on B/S?
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*Section 4: Inventory FIFO/LIFO – 10 Qs*
*Q31*: Inflation period. FIFO vs LIFO. Which higher COGS?
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*Q32*: Inflation period. Which higher NI?
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*Q33*: Inflation period. Which higher ending inventory B/S?
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*Q34*: LIFO Reserve = FIFO Inv – LIFO Inv. FIFO $500K, LIFO $400K.
*Q*: LIFO Reserve?
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*Q35*: Prices falling. Which method higher COGS?
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*Q36*: Perpetual vs Periodic FIFO: COGS same?
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*Q37*: Perpetual vs Periodic LIFO: COGS same?
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*Q38*: LIFO liquidation occurs when:
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*Q39*: Lower of Cost or Market. Replacement cost $80, NRV $90, NRV-Profit $70, Cost $85.
*Q*: Market?
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*Q40*: IFRS allows LIFO?
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*Section 5: Prior Period Adj, Acct vs Mgmt Acct – 10 Qs*
*Q41*: Error: 2024 depreciation understated $50,000. Found 2025. Tax 25%.
*Q*: 2025 adjustment?
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*Q42*: Change from LIFO to FIFO.
*Q*: Treatment?
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*Q43*: Change in useful life estimate.
*Q*: Treatment?
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*Q44*: Financial accounting primary users?
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*Q45*: Management accounting primary users?
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*Q46*: Which is not GAAP: accrual, cash, consistency?
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*Q47*: Profitability ratio example?
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*Q48*: Liquidity ratio example?
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*Q49*: Solvency ratio example?
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*Q50*: Leverage ratio example?
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*Section 6: Capital Maintenance, Theories, Stakeholders – 10 Qs*
*Q51*: Financial capital maintenance: Profit if:
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*Q52*: Physical capital maintenance: Profit if:
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*Q53*: Proprietary theory: Equation?
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*Q54*: Entity theory: Equation?
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*Q55*: Residual equity theory: Focus on?
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*Q56*: Internal stakeholder example?
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*Q57*: External stakeholder example?
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*Q58*: Agency theory problem?
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*Q59*: Stewardship concept in financial reporting?
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*Q60*: Capital structure =
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*Section 7: Dividends, Investments – 10 Qs*
*Q61*: Cash dividend declared $1/share, 100,000 shares.
*Q*: JE?
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*Q62*: 10% Stock dividend, FMV $20, 100,000 shares out.
*Q*: Amount to RE?
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*Q63*: Large stock dividend 50%. Par $1, FMV $20.
*Q*: Amount to RE?
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*Q64*: Trading securities, unrealized gain $10,000.
*Q*: I/S impact?
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*Q65*: AFS securities, unrealized gain $10,000.
*Q*: Where reported?
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*Q66*: HTM securities measured at?
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*Q67*: HTM security impaired, credit loss.
*Q*: I/S impact?
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*Q68*: Sell AFS with $5,000 unrealized gain in OCI.
*Q*: On sale?
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*Q69*: Dividend received on trading stock.
*Q*: I/S?
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*Q70*: Equity method, investee earns $100,000. Investor owns 30%.
*Q*: Investor income?
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*Section 8: Inventory Methods, Goodwill, Consolidation – 10 Qs*
*Q71*: Perpetual inventory: When is COGS recorded?
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*Q72*: Periodic inventory: When is COGS calculated?
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*Q73*: Gross profit method used for?
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*Q74*: Retail method: Cost ratio 60%. Ending retail $100,000.
*Q*: Ending inventory cost?
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*Q75*: Parent buys 80% Sub for $1,000,000. FV of Sub net assets $900,000.
*Q*: Goodwill?
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*Q76*: If NCI at full FV $250,000. Same deal.
*Q*: Goodwill full?
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*Q77*: Goodwill impairment test frequency?
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*Q78*: Parent sells inventory to Sub for $120,000, cost $100,000. Sub sells 50% to outside.
*Q*: Unrealized profit to eliminate?
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*Q79*: Intercompany receivable $50,000 / payable $50,000.
*Q*: Consolidation JE?
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*Q80*: Sub declares $40,000 dividend. Parent owns 80%.
*Q*: NCI share?
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*Section 9: Mixed Advanced – 20 Qs*
*Q81*: Capital maintenance vs Income: If prices rising, physical capital method shows?
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*Q82*: Proprietary vs Entity: Interest expense under proprietary theory is?
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*Q83*: Current ratio 2.0. Buy inventory on account. New ratio?
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*Q84*: Debt-to-Equity 1.5. Issue new stock for cash. D/E?
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*Q85*: ROI 10%. Leverage positive if ROA >?
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*Q86*: Trading security bought $50, end yr1 FV $60, end yr2 FV $55.
*Q*: Yr2 I/S?
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*Q87*: AFS bought $50, yr1 FV $60, yr2 sold $58. Tax 25%.
*Q*: Yr2 NI impact?
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*Q88*: HTM bond, amortized cost $100,000. FV $90,000. No credit loss.
*Q*: B/S?
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*Q89*: Periodic system: Purchase returns where?
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*Q90*: Perpetual system: Purchase return JE?
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*Q91*: Consolidation: Parent’s investment account eliminated against?
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*Q92*: NCI on B/S shown as?
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*Q93*: Goodwill impairment loss on I/S affects NCI?
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*Q94*: Deferred tax due to depreciation: DTL. Equipment sold.
*Q*: DTL?
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*Q95*: Stock dividend vs stock split: Accounting difference?
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*Q96*: Operating lease expense pattern?
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*Q97*: Finance lease B/S: Liability =?
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*Q98*: FIFO in inflation: Tax paid higher or lower?
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*Q99*: Change from cash to accrual: Treatment?
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*Q100*: Primary objective of financial reporting per FASB?
*Answer:
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