To provide candidates with a brief view of some of the types of questions on the CMA® (Certified Management Accountant) exam, here are five questions – with correct answers and explanations for each.
CMA Exam Part 1:
1. When assessing a company’s internal control structure policies and procedures, the primary consideration is whether they
- prevent management override.
- relate to the control environment.
- reflect management’s philosophy and operating style.
- affect the financial statement assertions.
Correct answer: d. One of the main objectives of internal controls is to provide reasonable assurance of reliability of financial reporting (financial statement assertions).
2. A primary advantage of an ERP system is
- program-data dependence.
- separate data updating for different functions.
- data redundancy.
- centralization of data.
Correct answer: d. An advantage of an ERP system is the elimination of data redundancy through the use of a central database. In principle, information about an item of data is stored once and all functions have access to it. Thus, when the item (e.g., price) is updated, the change is effectively made for all functions. The result is reliability (data integrity).
CMA Exam Part 2:
3. Davis Retail Inc. has current assets of $7,500,000 and a current ratio of 2.3 times before purchasing $750,000 of merchandise on credit for resale. After this purchase, the current ratio will
- remain at 2.3 times.
- be higher than 2.3 times.
- be lower than 2.3 times.
- be exactly 2.53 times.
Correct answer: c. Davis’s current ratio will be lower than 2.3 times as shown below.
4. Johnson waits two hours in line to buy a ticket to an NCAA Final Four Tournament game. The opportunity cost of buying the $200 ticket is
- Johnson’s best alternative use of the $200.
- Johnson’s best alternative use of the two hours it took to wait in line.
- the value of the $200 to the ticket agent.
- Johnson’s best alternative use of both the $200 and the two hours spent in line.
Correct answer: d. The opportunity cost is Johnson’s best alternative use of both the $200 and the two hours. Opportunity cost is the contribution foregone by not using a limited resource in its next best alternative use.
5. A U.S. publicly traded company issued its corporate social responsibility report. The report included the amount of renewable resources it uses in its products. Which one of the following is not a reason for making the disclosure?
- The company was required by law to file a report with this disclosure.
- The company may be able to charge a premium and gain customer loyalty.
- The report can be used as a marketing tool for the company’s products.
- The report can be used to differentiate the company from its competitors.
Correct answer: a. A corporate social responsibility report is required of public companies in the European Union but is optional for public companies in the U.S.