To provide candidates with a brief view of some of the types of questions on the CMA® (Certified Management Accountant) exam, the following are five with correct answers and explanations for each.
You can also check out these additional practice multiple-choice and essay questions to test your CMA knowledge.
CMA Exam Part 1:
- A company has a fixed overhead volume variance that is $10,000 unfavorable. The most likely cause for this variance is that
a. supervisory salaries were more than planned.
b. supervisory salaries were less than planned.
c. production was more than planned.
d. production was less than planned.
Correct answer d. A fixed overhead volume variance is dependent on quantity, above or below the planned quantity. An unfavorable volume variance means that production was less than planned.
- A company’s accounting information system needs to capture the information of the financing cycle, which encompasses all transactions involving
a. sales to customers and the collection of cash receipts for those sales.
b. the purchase and payment of supplies and services it consumes.
c. the hiring, training, and payment of employees.
d. the investment of capital, borrowing money, payment of interest, and loan repayments.
Correct answer d. The financing cycle encompasses all transactions involving the investment of capital in the company, borrowing money, payment of interest, and loan repayments.
CMA Exam Part 2:
- In analyzing the short-term liquidity of a firm, many analysts prefer to use the quick (or acid test) ratio rather than the current ratio. The primary reason for this preference is that the
a. quick ratio excludes accounts receivable.
b. current ratio includes marketable securities that may be mispriced.
c. pro-forma cash flow statements focus on cash only.
d. conversion of inventory into cash is less reliable.
Correct answer d. Both the current ratio and the quick ratio include cash, accounts receivable, and marketable securities; therefore, a, b, and c are incorrect. Option d is correct because the quick ratio does not include inventory, which is considered less liquid than the other current assets.
- Even though a company implements an enterprise risk management program, it still is likely to have risk. This risk is considered
Correct answer c. The residual risk is the remaining risk or danger associated with an action or event after natural or inherent risks have been reduced by risk controls.
- At the conclusion of a capital budgeting project, a piece of equipment is expected to be sold for $500,000. At the time of sale, the book value of the equipment would be $400,000. If the income tax rate is 35%, what is the after-tax cash flow from the sale of the machine?
Correct answer c.
$500,000 – ($500,000 – $400,000) x .35 = $465,000