CMA Exam Practice Questions
To provide candidates with a brief view of some of the types of questions on the CMA® (Certified Management Accountant) exam, below are five questions – with correct answers and explanations for each.
You can also check out these additional practice multiple-choice and essay questions (in PDF format) and try the new interactive practice quiz, available on the IMA® (Institute of Management Accountants) website, to test your skills and expertise.
CMA Exam Part 1:
1. In order to properly segregate duties, which function within the computer department should be responsible for reprocessing the errors detected during the processing of data?
a. Department manager.
b. Systems analyst.
c. Computer programmer.
d. Data control group.
Correct answer d. In order to properly segregate duties within the computer department, the responsibility to reprocess the errors detected during processing of the data should be given to the data control group and not to the department manager, who should have access to review transactions but not process transactions; the systems analyst, who should have access to view and analyze transactions but not process transactions; or the computer programmer, who should have access to programs, not transactions.
2. Which one of the following best describes data mining?
a. Searching through large amounts of computerized data to find useful patterns and trends.
b. Examining raw data in order to draw conclusions from that data.
c. Integrating data, technology, and analytics to optimize business decisions.
d. Inspecting, cleansing, revising, and modeling raw data in order to find valuable data.
Correct answer a. This option provides the best definition of data mining. Option “b” describes data analytics. Option “c” describes business analytics. Option “d” describes data analysis.
CMA Exam Part 2:
3. When reviewing a credit application, the credit manager should be most concerned with the applicant’s
a. profit margin and return on assets.
b. price-earnings ratio and current ratio.
c. working capital and return on equity.
d. working capital and current ratio.
Correct answer d. A comparison of current assets with current liabilities gives an indication of the short-term debt-paying ability of a firm. Both working capital and the current ratio compare current assets with current liabilities and, therefore, measure credit worthiness.
4. A company plans to add a new product that would affect its indirect labor costs in two ways. First, the production manager from an existing product would serve as manager of the new product. Her current assistant manager would be promoted and assume her previous position. Second, the existing maintenance staff would provide facility and machine maintenance that would require 30 hours of labor each month, but no increase in their total weekly hours worked. The company’s production managers earn $60,000 annually, assistant production managers are paid $50,000 each year, and maintenance employees earn $20 per hour. No additional hiring is planned. The annual relevant indirect labor costs for adding the new product would total:
Correct answer c. $60,000 – $50,000 = $10,000. This is the raise that would be given to the assistant manager. Since no new maintenance employees are needed and the current production manager will make the same salary, these payments would not differ between the alternatives.
5. All of the following would increase the present value of the incremental tax savings associated with the depreciation of an asset except a decrease in the
a. useful life of the asset.
b. marginal income tax rate.
c. discount rate.
d. salvage value of the asset.
Correct answer b. A decrease in the marginal tax rate will lead to a decrease in the present value of the tax-deductible amount due to depreciation. Recall that the tax shield amount is calculated as depreciation times tax rate.