CMA Accounting Exam Questions & Answers 2026 (1–10)

Question 1

Which budget is the starting point and foundation for nearly all other operating budgets in a manufacturing firm?

TheoryPractice · Accepted Answer

The sales budget. The sales forecast drives production, materials, labor, and overhead budgets, so the sales budget is prepared first and underpins the entire master budget.

Question 2

A master budget is best described as:

TheoryPractice · Accepted Answer

A comprehensive set of interrelated budgets covering all operations for a period. The master budget is the overall financial plan, integrating operating budgets and financial budgets into pro forma statements for the organization.

Question 3

Under zero-based budgeting, each budgeting period a manager must:

TheoryPractice · Accepted Answer

Justify all expenditures from a zero base rather than from the prior year's level. 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.

Question 4

A flexible budget differs from a static budget in that it:

TheoryPractice · Accepted Answer

Is adjusted to reflect the actual level of activity achieved. A flexible budget restates budgeted revenues and costs for the actual output level, isolating price/efficiency effects from volume effects.

Question 5

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:

TheoryPractice · Accepted Answer

53,000. Production = Sales + Desired ending inventory - Beginning inventory = 50,000 + 9,000 - 6,000 = 53,000 units.

Question 6

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:

TheoryPractice · Accepted Answer

63,000. Materials needed for production = 20,000 x 3 = 60,000 lbs. Purchases = 60,000 + 8,000 ending - 5,000 beginning = 63,000 lbs.

Question 7

Which item would appear as a cash disbursement in a cash budget but NOT reduce net income in the same period?

TheoryPractice · Accepted Answer

Purchase of equipment for cash. 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.

Question 8

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:

TheoryPractice · Accepted Answer

$130,000. June collections = 60% of June ($150,000 x 0.60 = $90,000) + 40% of May ($100,000 x 0.40 = $40,000) = $130,000.

Question 9

A continuous (rolling) budget is one that:

TheoryPractice · Accepted Answer

Adds a new period as each period elapses, always maintaining a set horizon. 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).

Question 10

A key behavioral risk of participative (bottom-up) budgeting is:

TheoryPractice · Accepted Answer

Budgetary slack created by managers padding estimates. When managers help set their own targets, they may build in slack (understating revenue or overstating costs) to make targets easier to achieve.

CMA Accounting Exam Questions & Answers 2026 (1–10)

More CMA Accounting practice questions

Free practice here. Timed mocks when you are ready.