CMA Exam

Multiple-Choice
Questions
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 CMA Part-One
Multiple-Choice
Questions

1 2 3 4 5 6 7 8 9 10

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 Multiple-Choice Questions
CMA Part-One 1 2 3 4 5 6 7 8 9 10

3 4

1 MCQ

Which statement regarding capital structure is

incorrect?

A. When a company issues more shares of common stock

for an amount more than the par value per share, com-
mon stock and additional paid in capital both increase.

Answer
B. If a business issues more debt and the equity balance
stays the same, the debt-to-equity ratio will increase.
D. Correct. A firm with more consistent
earnings is more likely to issue debt
C. A firm with more consistent earnings is more likely to than a business with inconsistent
issue debt than a business with inconsistent profits. profits. Consistent earnings make it
easier for a business to make princi-
D. A firm with inconsistent earnings is more likely to issue pal and interest payments on debt.
debt than a business with
consistent profits.

2 MCQ

Treeline Furniture receives an order for a cus-

tom-built dining room table. Treeline purchases
wood and other raw materials on March 21st, and
workers build the table on March 25th. An outside
contractor applies a finish to the tabletop on April
9th and is paid cash on the same day. The table is
delivered to the customer on April 28th, and the
Answer

customer pays for the table on May 2nd.

C. Correct. Revenue is recognized
when the seller delivers the
product to the buyer on April 28th.
When does Treeline recognize revenue?

A. March 21st

B. March 25th

C. April 28th

D. May 2nd

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 Multiple-Choice Questions
CMA Part-One 1 2 3 4 5 6 7 8 9 10

3 4

3 MCQ

The assembly department of a furniture manufac-

turer is subject to an 85% learning curve. The total
time required to assemble the first dining room ta-
ble is 12 hours. What will be the average time re-
quired to assemble the first two dining room tables,
using the cumulative average-time learning model?

Answer
A. 20.4 hours correct, see below
A. 20.4 hours

B. 22 hours 12 hours, time required for the first

table) x 2 x (85% learning curve) =
C. 23.5 hours 20.4 hours

D. 24 hours

4 MCQ

Acme Manufacturing is creating the 2021 pro-for-

ma income statement. Projected sales volume is
120% of the $520,000 2020 sales total. Cost of goods
sold is projected to be 95% of the $370,000 2020
balance. What is gross profit in the 2021 pro-forma
income statement? C. $272,500 correct, see below
Answer

A. $280,100
Projected sales volume = 120% x
B. $325,600 $520,000 = $624,000

C. $272,500 Projected cost of goods sold = 95%

x $370,000 = $351,500
D. $624,000
Gross profit in the 2021 pro-forma
income statement = $624,000 -
$351,500 = $272,500

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 Multiple-Choice Questions
CMA Part-One 1 2 3 4 5 6 7 8 9 10

3 4

5 MCQ
Standard Manufacturing has reviewing this bud-
geted and actual cost information for a furniture
product:

Standard direct labor rate per hour $28

Standard hours of direct labor 3,600 hours
used based on actual output
Actual direct labor rate per hour $26

Answer
Actual hours of direct labor used 3,500 hours
D. $2,800 favorable variance correct,
see below
What is the direct labor efficiency variance?

A. $5,200 favorable variance Direct labor efficiency variance:

(3,500 actual hours - 3,600 standard
hours) x $28 standard labor rate per
B. $5,200 unfavorable variance
unit = $2,800 favorable variance
(actual usage less than standard)
C. $2,800 unfavorable variance

D. $2,800 favorable variance

6 MCQ

Outfield Sporting Goods has these 2020 financial

results for the baseball bat division:

Operating income $700,000

Operating expenses $300,000
Required rate of return 10.5%
$6,100,000
B. $59,500 correct, see below
Average Operating Assets
Answer

What is the residual income for 2020? $700,000 Operating Income -

(10.5% required rate of return x
$6,100,000 Average Operating
A. A. $47,000 Assets) = 700,000 - $640,500 =
$59,500
B. B. $59,500

C. C. $61,000

D. D. $70,800

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 Multiple-Choice Questions
CMA Part-One 1 2 3 4 5 6 7 8 9 10

7 MCQ
Premier Furniture has the following job order cost
information for baseball gloves completed and
sold during March 2021:
Direct material used in production $50,000
6,500 hours
Direct labor used in production B.
worked at $25/ hour $264,500 correct, see below
Direct labor hours

Answer
Manufacturing overhead applied
worked at $8/ hour
Direct material used in production $50,000
What is the amount posted to the cost of goods 6,500 hours x $25/
Direct labor used in production
sold account? hour = $162,500

Manufacturing overhead applied 6,500 hours x $8/

A. $175,400 hour = $52,000

Amount posted to cost of goods sold $264,500

B. $264,500

C. $290,000

D. $310,800

8 MCQ
Sterling Manufacturing produced 12,000 units of
product, and had the following financial results
for the month of March:
Sales 250,000
Direct materials 75,000
Direct labor 150,000 C, $14.58 correct, see below
Answer

Manufacturing overhead 30,000

Ending inventory 60,000
Throughput contribution margin:
250,000 sales - 75,000 direct
What is the throughput contribution materials = 175,000
margin per unit?
Throughput contribution margin
A. $12.91 per unit: 175,000 / 12,000 units
produced = $14.58
B. $13.60

C. $14.58

D. $15.33

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 Multiple-Choice Questions
CMA Part-One 1 2 3 4 5 6 7 8 9 10

9 MCQ
Which statement is not a property, plant, and
equipment cycle process for a furniture manu-
facturer’s accounting information system (AIS)?

A. The CFO evaluates the total cost of ownership, which

excludes installation and training costs that are ex-

Answer
pensed as incurred
A. Correct. The CFO evaluates the total
B. The CFO assesses the long-term capacity needed for
cost of ownership, including installa-
furniture production and shipping
tion, training, and operating costs.
Management considers the financial impact of rent-
C.
ing vs. buying equipment

The CFO evaluates the total cost of ownership, in-

D.
cluding installation and training costs

10 MCQ
Sterling Furniture produces furniture in a very
competitive market. The management team is
considering benchmarking to improve the firm’s
performance in the marketplace. Which state-
ment is not a benefit of using benchmarking?

Benchmarking will help Sterling make continuous im-

Answer

A.
provements, and help the firm stay competitive B. Correct. Benchmarking will help
Sterling make continuous im-
Benchmarking is an objective tool to assess perfor- provements, and help the firm stay
B. mance, and company management is more likely to competitive. The process goes on
rely on the results to make informed decisions constantly.

If Sterling performs benchmarking every two to three

C.
years, the company will know what is required to re-
main competitive
D.
Benchmarking sets a standard for high performance,
and meeting the benchmarks will improve company
results

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 CMA Part-Two
Multiple-Choice
Questions

1 2 3 4 5 6 7 8 9 10

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 Multiple-Choice Questions
CMA Part-Two 1 2 3 4 5 6 7 8 9 10

1 MCQ
Sterling Manufacturing is reviewing the income
statement results for the past two years:
Year 2020 2019
Sales $2,000,000 $1,850,000
Cost of sales $1,200,500 $1,200,080
Gross profit
A. 23% correct, see below
Operating expenses $560,000 $510,000

Answer
Income from operations

Sterling is trying to maintain a gross profit level that Year 2020 2019
compares to industry averages. What is the per- Sales $2,000,000 $1,850,000
centage increase in gross profit from 2019 to 2020? Cost of sales $1,200,500 $1,200,080
Gross profit $799,500 $649,920

A. 23%
Gross profit change: ($799,500 ‘20 gross profit -
$649,920 ‘19 gross profit) / ($649,920 ‘19 gross
B. 8,1%
profit) = 23% increase

C. 0.03%

D. 40%

2 MCQ
Standard Clothing had these financial results
for 2020:
Sales 1,200,000
Credit sales 950,000
Gain on sale of equipment 65,000
Unrealized gain on investments 120,000
Answer

A. 6.33 correct, see below

If average gross accounts receivable is $150,000,
what is the accounts receivable turnover ratio? Accounts receivable turnover ratio = $950,000
credit sales / $150,000 average gross accounts
A. 6.33 receivable = 6.33

B. 8.00

C. 14.62

D. 7.92

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 Multiple-Choice Questions
CMA Part-Two 1 2 3 4 5 6 7 8 9 10

3 MCQ
Sterling Manufacturing is reviewing the income
statement results for the past two years:
EBITDA $1,500,000
Operating income $1,350,000
Net income $1,050,000
Preferred dividends $225,000
Book value of company’s equity $1,200,000 A. 1.5 correct, see below
Number of common stock shares outstanding 100,000

Answer
Common stock market price per share $18
The controller is calculating financial ratios, which Market price per share $18
will be included in an investor presentation. The Book value per share $1,200,000 / 100,000 shares = $12
firm’s common stock price has increased in the last Market-to-book ratio $18 / $12 = 1.5
six months, and management wants to compare
the common stock market price to other metrics.
What is the market-to-book ratio for 2020?
A. 1.5

B. 2.25

C. 10.50

D. 1.13

4 MCQ
Precision Manufacturing measures profitability
based on the amount of income generated using
assets in each of three business units. Here are the
2020 results for Precision: A. 5.23% correct, see below
Answer

Business unit Income generated Assets invested

Tool and die $200,000 $3,500,000 Business unit Income generated Assets invested
Door frames $75,000 $2,250,000 Tool and die $200,000 $3,500,000
Refrigerator doors $125,000 $1,900,000 Door frames $75,000 $2,250,000

What is the combined rate of return for all three Refrigerator doors $125,000 $1,900,000
Totals $400,000 $7,650,000
business units?
Combined rate of return = $400,000 income
A. 5.23% generated / $7,650,000 assets invested = 5.23%

B. 4.82%

C. 6.02%

D. 4.78%

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 Multiple-Choice Questions
CMA Part-Two 1 2 3 4 5 6 7 8 9 10

5 MCQ
Standard Manufacturing is assessing whether the
company should purchase Premier Tool and Die
for $150,000. Standard is using the discounted
cash flow method to make the purchase decision.
C.
Premier is expected to generate free cash flows, $135,450, the company should not be
purchased. Correct, the total present
which are listed below. Assuming a discount factor
value is less than the $150,000 pur-
of 9%, what is the present value of discounted cash chase price- see below.

Answer
flows, and should Standard purchase Premier?
Year Free cash Discount factor Discounted free
Year Free cash flows Discount factor
flows cash flow
1 $6,000 .9174
1 $6,000 .9174 $5,504
2 $14,000 .8417
3 $20,000 .7722 2 $14,000 .8417 $11,784

4 $25,000 .7084 3 $20,000 .7722 $15,444

Terminal value $120,000 .7084 4 $25,000 .7084 $17,710
Terminal value $120,000 .7084 $85,008

A. $129,946, the company should not be purchased Present value of dis- $135,450
counted cash flows

B. $185,000, the company should not be purchased

C. $135,450, the company should not be purchased

D. $120,000, the company should not be purchased

6 MCQ
Premier Retail sells a golf sweater for $60. The vari-
able cost per unit is $42, and the total fixed costs
are $100,000. If the sales level is 15,000 units, what
Answer

is the CVP formula profit? C. $170,000 correct, see below

A. $200,000
Profit = ($60 sale price per unit X 15,000 units)
- ($42 variable cost per unit X 15,000 units) -
B. $190,000 $100,000 fixed costs = $170,000

C. $170,000

D. $20,000

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 Multiple-Choice Questions
CMA Part-Two 1 2 3 4 5 6 7 8 9 10

7 MCQ
Premier Fashions is planning production of men’s
sweaters for the upcoming year. Premier prices
sweaters based on the basic cost-based approach,
and gathers this production data:

Product Fall Comfort

Desired profit $75,000 A. $74.19 correct, see below
Units produced 16,000

Answer
Variable costs $52 per unit
Total variable costs = $52 per unit X 16,000
Fixed cost $280,000
units produced = $832,000
What is the minimum price Premier must charge to
Price = ($280,000 total fixed costs + $832,000
achieve its desired profit level? total variable costs + $75,000 desired profit) /
16,000 number of units produced = $74.19
A. $74.19

B. $52.00

C. $22.19

D. $56.69

8
Central Bank is required to have a capital adequacy
ratio of 10%.
Here are some factors that impact the ratio:
• Central has $120,000 in common stock out
standing, and $300,000 in retained earnings
• The bank has $40,000 in perpetual pre B. 12.4% Correct, see below
ferred stock outstanding, which is considered
Answer

a hybrid instrument CAR = (Tier 1 capital + Tier 2 capital) / Risk

• Central has $3,700,000 in risk-weighted assets weighted assets

What is Central’s capital adequacy ratio (CAR)? CAR = ($120,000 common stock + $300,000 in re-
tained earnings + $40,000 in perpetual preferred
A. 9.2% stock) / $3,700,000 risk weighted assets = 12.4%

B. 12.4%

C. 4.3%

D. 11.4%

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 Multiple-Choice Questions
CMA Part-Two 1 2 3 4 5 6 7 8 9 10

9 MCQ
Seaside Gifts processes hundreds of small deb-
it card and credit card transactions each week.
The process requires a level of manual input and
recordkeeping. Seaside’s owner wants to reduce
the labor hours required to process payments by
investing in a point of sale (POS) system.
D. $48,000, Correct, see below
In year one after the POS system is installed, Sea-

Answer
side has incremental payroll savings of $60,000
for the year, and posts $20,000 in depreciation ex- Payroll savings $60,000

pense on the POS system. The tax rate is 30% Less: Depreciation expense $20,000
Equals: Earnings before tax $40,000

Which is the net cash flow for year one? Less: Taxes (30%) $12,000
Equals: Net income $28,000
A. $20,000 Add: Depreciation expense $20,000
Equals: Net cash flow $48,000
B. $28,000

C. $40,000

D. $48,000

10
A foreman for a tree service company is responsible
for billing customers after a project is complete, and
the foreman provides a copy of the bill to the compa-
ny secretary. The foreman bills five customers using a
fake invoice, with payments sent to a company name
and address that he personally controls. The customer B. Correct. The pressure component of
payments are never paid to the tree service company
Answer

the fraud triangle represents the rea-

son why an individual commits fraud.
What statement is correct? The opportunity component of the
The company has weak internal controls over billing. The opportuni- fraud triangle refers to the ability or
A. ty component of the fraud triangle means that strong internal con-
chance that an individual may com-
mit fraud without detection.
trols are in place to prevent the fraud opportunity from occurring

B. The foreman was under financial pressure when he committed the

fraud. The pressure component of the fraud triangle represents the
reason why an individual commits fraud

The foreman believes that his compensation is too low. The ratio-
C. nalization component of the fraud triangle refers to management’s
rationale for investing in internal controls to prevent fraud

There are multiple reasons why an employee may commit fraud. If

D.
all three components of the fraud triangle exist in a business, fraud
is certain to occur

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 CMA Multiple-Choice Questions
CMA Part 1 1 2 3 4 5 6 7 8 9 10

3 4

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