TheoryCMA Accounting
Practice Test
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30 free CMA Accounting questions
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Planning & Budgeting
Which budget is the starting point and foundation for nearly all other operating budgets in a manufacturing firm?
Correct — B. The sales forecast drives production, materials, labor, and overhead budgets, so the sales budget is prepared first and underpins the entire master budget. -
Planning & Budgeting
A master budget is best described as:
Correct — C. The master budget is the overall financial plan, integrating operating budgets and financial budgets into pro forma statements for the organization. -
Planning & Budgeting
Under zero-based budgeting, each budgeting period a manager must:
Correct — A. Zero-based budgeting requires every activity and cost to be justified anew each cycle as if starting from zero, rather than carrying forward last year's amounts. -
Planning & Budgeting
A flexible budget differs from a static budget in that it:
Correct — C. A flexible budget restates budgeted revenues and costs for the actual output level, isolating price/efficiency effects from volume effects. -
Planning & Budgeting
Budgeted sales are 50,000 units. Beginning finished-goods inventory is 6,000 units and desired ending inventory is 9,000 units. Budgeted production (units) equals:
Correct — B. Production = Sales + Desired ending inventory - Beginning inventory = 50,000 + 9,000 - 6,000 = 53,000 units. -
Planning & Budgeting
A firm plans to produce 20,000 units, each requiring 3 lbs of material. Beginning material inventory is 5,000 lbs; desired ending is 8,000 lbs. Materials to be purchased (lbs) equal:
Correct — C. Materials needed for production = 20,000 x 3 = 60,000 lbs. Purchases = 60,000 + 8,000 ending - 5,000 beginning = 63,000 lbs. -
Planning & Budgeting
Which item would appear as a cash disbursement in a cash budget but NOT reduce net income in the same period?
Correct — A. A capital asset purchase is a cash outflow but is expensed over time via depreciation, so it hits the cash budget immediately without an equal current-period expense. -
Planning & Budgeting
Credit sales are collected 60% in the month of sale and 40% the following month. Sales were $100,000 in May and $150,000 in June. June cash collections equal:
Correct — B. June collections = 60% of June ($150,000 x 0.60 = $90,000) + 40% of May ($100,000 x 0.40 = $40,000) = $130,000. -
Planning & Budgeting
A continuous (rolling) budget is one that:
Correct — A. A rolling budget continually adds a future month or quarter as the current one ends, keeping a constant forward-looking horizon (e.g., always 12 months). -
Planning & Budgeting
A key behavioral risk of participative (bottom-up) budgeting is:
Correct — B. When managers help set their own targets, they may build in slack (understating revenue or overstating costs) to make targets easier to achieve. -
Planning & Budgeting
The document that summarizes long-term goals and the strategy to achieve them, guiding the annual budget, is the:
Correct — C. Budgeting flows from strategy: the strategic plan sets multi-year objectives, which the annual operating budget then operationalizes. -
Planning & Budgeting
A manufacturing overhead budget shows budgeted variable overhead of $4 per direct labor hour and fixed overhead of $50,000. At 10,000 direct labor hours, total budgeted overhead is:
Correct — D. Total overhead = Variable (10,000 x $4 = $40,000) + Fixed ($50,000) = $90,000. -
Planning & Budgeting
In regression analysis used for forecasting costs, the coefficient of determination (R-squared) measures:
Correct — A. R-squared indicates goodness of fit: the fraction of variability in the cost (dependent variable) explained by the activity driver (independent variable). -
Planning & Budgeting
Under an 80% learning curve, the first unit takes 100 hours. The cumulative average time per unit for 2 units is:
Correct — B. With an 80% cumulative-average learning curve, doubling output multiplies cumulative average time by 0.80: 100 x 0.80 = 80 hours per unit. -
Planning & Budgeting
Using the 80% learning curve where the cumulative average for 2 units is 80 hours, the total time for the first 4 units is:
Correct — C. At 4 units, cumulative average = 80 x 0.80 = 64 hours. Total = 64 x 4 = 256 hours. -
Planning & Budgeting
A cost that remains constant in total but varies inversely per unit as volume changes is a:
Correct — B. Fixed costs stay constant in total over the relevant range, so per-unit fixed cost falls as volume rises and rises as volume falls. -
Planning & Budgeting
Using the high-low method: at 8,000 units cost is $34,000; at 4,000 units cost is $22,000. The variable cost per unit is:
Correct — C. VC per unit = (34,000 - 22,000) / (8,000 - 4,000) = 12,000 / 4,000 = $3.00. -
Planning & Budgeting
Continuing the prior data (VC = $3/unit; at 4,000 units cost = $22,000), the estimated fixed cost is:
Correct — A. Fixed cost = Total cost - Variable cost = 22,000 - (4,000 x $3) = 22,000 - 12,000 = $10,000. -
Planning & Budgeting
Pro forma financial statements in a master budget are:
Correct — B. Pro forma statements project the expected income statement, balance sheet, and cash flows resulting from the budget's planned activities. -
Planning & Budgeting
Sensitivity analysis in budgeting is used to:
Correct — A. Sensitivity (what-if) analysis tests how the budget responds to changes in assumptions such as sales volume, price, or cost, helping assess risk. -
Planning & Budgeting
Kaizen budgeting incorporates:
Correct — C. Kaizen budgeting builds expected continuous-improvement cost reductions directly into budgeted figures for each successive period. -
Planning & Budgeting
Activity-based budgeting builds the budget by:
Correct — B. ABB starts with output demand, determines the activities required, and budgets resources based on activity cost drivers rather than department line items. -
Planning & Budgeting
Budgeted sales are 10,000 units at $20. Variable cost is $12/unit and fixed costs are $50,000. Budgeted operating income is:
Correct — C. Contribution margin = (20-12) x 10,000 = $80,000. Operating income = $80,000 - $50,000 fixed = $30,000. -
Planning & Budgeting
Production is budgeted at 5,000 units, each requiring 0.5 labor hours at $18/hour. Budgeted direct labor cost is:
Correct — A. Direct labor cost = 5,000 units x 0.5 hr x $18 = $45,000. -
Planning & Budgeting
A standard cost is best described as:
Correct — B. Standard costs are predetermined benchmarks for what a unit should cost under efficient conditions, used as a basis for budgeting and variance analysis. -
Planning & Budgeting
Building budgetary slack is most likely when:
Correct — D. When rewards depend on beating self-set targets, managers are tempted to lowball revenue or pad costs, creating slack. -
Planning & Budgeting
In time-series forecasting, the systematic, calendar-related up-and-down pattern within a year is the:
Correct — B. Seasonality refers to recurring within-year patterns tied to the calendar (e.g., holiday sales), distinct from the longer-term trend and multi-year cyclical effects. -
Planning & Budgeting
A capital budget primarily addresses:
Correct — A. The capital budget plans major long-term asset acquisitions and projects, evaluated with techniques such as NPV and IRR. -
Planning & Budgeting
The financial budgets within a master budget typically include all EXCEPT the:
Correct — C. The sales budget is an operating budget; financial budgets focus on cash, capital spending, and the budgeted balance sheet. -
Planning & Budgeting
In simple linear regression of total cost on units, the intercept term best estimates:
Correct — C. The regression equation Y = a + bX gives 'a' (intercept) as estimated fixed cost and 'b' (slope) as variable cost per unit.
CMA Accounting sample questions
Tap any question below to reveal the answer and a plain-English explanation.
Planning & Budgeting Which is NOT a primary purpose of budgeting?
A. Planning
B. Coordination and communication
C. Performance evaluation
D. Guaranteeing profit ✓
Correct — D. Budgets plan, coordinate, motivate, and control, but they cannot guarantee profit, which depends on execution and external conditions.
Performance Management A favorable variance generally occurs when:
A. Actual cost exceeds standard cost
B. Actual cost is less than standard cost ✓
C. Actual revenue is less than budgeted revenue
D. Actual output equals budgeted output
Correct — B. A cost variance is favorable when actual costs come in below standard, increasing income relative to plan.
Cost Management Direct materials and direct labor together are referred to as:
A. Conversion costs
B. Prime costs ✓
C. Period costs
D. Overhead costs
Correct — B. Prime costs = direct materials + direct labor; conversion costs = direct labor + manufacturing overhead.
Internal Controls The COSO Internal Control - Integrated Framework defines internal control objectives in three categories: operations, compliance, and:
A. Liquidity
B. Reporting ✓
C. Taxation
D. Marketing
Correct — B. COSO's three objective categories are operations, reporting, and compliance; the framework also defines five integrated components.
Financial Statement Analysis Current assets are $300,000 and current liabilities are $150,000. The current ratio is:
A. 0.5
B. 2.0 ✓
C. 3.0
D. 1.5
Correct — B. Current ratio = Current assets / Current liabilities = 300,000 / 150,000 = 2.0.
Corporate Finance The present value of a future amount will be higher when:
A. The discount rate is higher
B. The discount rate is lower ✓
C. The time period is longer at a constant rate
D. Compounding is more frequent
Correct — B. PV moves inversely with the discount rate; a lower rate discounts the future cash flow less, raising its present value.
Decision Analysis A product sells for $50 with variable cost of $30 and total fixed costs of $200,000. The breakeven point in units is:
A. 4,000 units
B. 10,000 units ✓
C. 6,667 units
D. 20,000 units
Correct — B. Contribution margin per unit = 50 - 30 = $20. Breakeven units = Fixed costs / CM per unit = 200,000 / 20 = 10,000 units.
Ethics & Risk Management The IMA Statement of Ethical Professional Practice includes which four overarching standards?
A. Honesty, Fairness, Loyalty, Diligence
B. Competence, Confidentiality, Integrity, and Credibility ✓
C. Independence, Objectivity, Skepticism, Care
D. Accuracy, Timeliness, Relevance, Reliability
Correct — B. The IMA's four ethical standards for management accountants are Competence, Confidentiality, Integrity, and Credibility.
About the CMA Accounting test
The CMA Accounting measures the Finance & Accounting knowledge you'll actually rely on — tested the way the real exam asks it, not with trick questions. Practising real CMA Accounting-style questions, then sitting a full timed mock exam, is the fastest way to walk in knowing you'll pass.
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Rules, standards and best-practice procedures
Real-world scenarios and how to respond
Common mistakes and how to avoid them
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