CMA P1 Mock Exam

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It’s clear you made an effort… but your real performance is still waiting to shine! 😄
Don’t worry—this is just the starting point. With a bit more focus and review, you’ll see a big improvement.
Go back over the material, ask questions, work on the weak areas… and I’m here to support you every step of the way!

Best of Luck!
Dr. Hesham Mokhiemer

واضح إنك حاولت… بس لسه عندك فرصة كبيرة تطوّر مستواك! 😄
ولا تشيل هم—دي مجرد بداية. شوية تركيز ومراجعة إضافية وهتشوف الفرق بنفسك.
ارجع للمواد، اسأل لو في نقطة مش واضحة… وأنا معاك خطوة بخطوة. المهم إنك تكمل وما توقفش

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د. هشام مخيمر
Excellent work! This is a very strong performance — you clearly understand the material and are in full control.
Keep the momentum and aim to stay among the top performers.
If you continue with this level of seriousness, hitting 100% is only a matter of time!
Best of Luck!
Dr. Hesham Mokhiemer

ممتاز! أداء قوي جدًا… باين إنك فاهم ومسيطر على المادة بشكل رائع
Top Performers استمر بالشكل ده وخليك من الـ
لو تكمّل بنفس الجدية دي… الوصول للـ 100% ان شاء الله, مسألة وقت بس
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Question 1 of 50

1. Question

The financial statements included in the annual report to the shareholders are least useful to which one of the following?

Stockbrokers.
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Bankers preparing to lend money.
Correct Incorrect Correct answer

Competing businesses.
Correct Incorrect Correct answer

Managers in charge of operating activities.
Correct Incorrect Correct answer

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Question 2 of 50

2. Question

Which one of the following would result in a decrease to cash flow in the indirect method of preparing a statement of cash flows?

Amortization expense.
Correct Incorrect Correct answer

Decrease in income taxes payable.
Correct Incorrect Correct answer

Decrease in inventories.
Correct Incorrect Correct answer

Proceeds from the issuance of common stock.
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Question 3 of 50

3. Question

The statement of shareholders’ equity shows a

reconciliation of the beginning and ending balances in shareholders' equity accounts.
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listing of all shareholders' equity accounts and their corresponding dollar amounts.
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computation of the number of shares outstanding used for earnings per share calculations.
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reconciliation of the beginning and ending balances in the Retained Earnings account.
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Question 4 of 50

4. Question

When using the statement of cash flows to evaluate a company’s continuing solvency, the most important factor to consider is the cash

balance at the end of the period.
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flows from (used for) operating activities.
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flows from (used for) investing activities.
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flows from (used for) financing activities.
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Question 5 of 50

5. Question

A statement of financial position provides a basis for all of the following except

computing rates of return.
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evaluating capital structure.
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assessing liquidity and financial flexibility.
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determining profitability and assessing past performance.
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Question 6 of 50

6. Question

The financial statement that provides a summary of the firm’s operations for a period of time is the

statement of financial position.
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income statement.
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statement of shareholders' equity.
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statement of retained earnings.
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Question 7 of 50

7. Question

All of the following are elements of an income statement except

shareholders' equity
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gains and losses.
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expenses.
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revenue.
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Question 8 of 50

8. Question

Dividends paid to company shareholders would be shown on the statement of cash flows as

operating cash inflows.
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operating cash outflows.
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cash flows from investing activities.
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cash flows from financing activities.
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Question 9 of 50

9. Question

All of the following are classifications on the statement of cash flows except

operating activities.
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equity activities.
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investing activities.
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financing activities.
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Question 10 of 50

10. Question

The purchase of fixed assets should be accounted for on the statement of cash flows as a(n)

operating activity.
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investing activity.
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financing activity.
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noncash investing and financing activity.
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Question 11 of 50

11. Question

A statement of cash flows prepared using the indirect method would have cash activities listed in which one of the following orders?

Financing, investing, operating.
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Investing, financing, operating.
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Operating, financing, investing.
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Operating, investing, financing.
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Question 12 of 50

12. Question

Kelli Company acquired land by assuming a mortgage for the full acquisition cost. This transaction should be disclosed on Kelli’s Statement of Cash Flows as a(n)

financing activity.
Correct Incorrect Correct answer

investing activity.
Correct Incorrect Correct answer

operating activity.
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non-cash financing and investing activity.
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Question 13 of 50

13. Question

Which one of the following should be classified as an operating activity on the statement of cash flows?

A decrease in accounts payable during the year.
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An increase in cash resulting from the issuance of previously authorized common stock.
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The purchase of additional equipment needed for current production.
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The payment of a cash dividend from money arising from current operations.
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Question 14 of 50

14. Question

All of the following are limitations to the information provided on the statement of financial position except the

quality of the earnings reported for the enterprise.
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judgments and estimates used regarding the collectability, salability, and longevity of assets.
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omission of items that are of financial value to the business such as the worth of the employees.
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lack of current valuation for most assets and liabilities.
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Question 15 of 50

15. Question

The most commonly used method for calculating and reporting a company’s net cash flow from operating activities on its statement of cash flows is the

direct method.
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indirect method.
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single-step method.
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multiple-step method.
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Question 16 of 50

16. Question

The presentation of the major classes of operating cash receipts (such as receipts from customers) less the major classes of operating cash disbursements (such as cash paid for merchandise) is best described as the

direct method of calculating net cash provided or used by operating activities.
Correct Incorrect Correct answer

cash method of determining income in conformity with generally accepted accounting principles.
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format of the statement of cash flows.
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indirect method of calculating net cash provided or used by operating activities.
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Question 17 of 50

17. Question

When a fixed asset is sold for less than book value, which one of the following will decrease?

Total current assets.
Correct Incorrect Correct answer

Current ratio.
Correct Incorrect Correct answer

Net profit.
Correct Incorrect Correct answer

Net working capital.
Correct Incorrect Correct answer

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Question 18 of 50

18. Question

The information reported in the statement of cash flows should help investors, creditors, and others to assess all of the following except the

company's ability to pay dividends and meet obligations.
Correct Incorrect Correct answer

company's ability to generate future cash flows.
Correct Incorrect Correct answer

management with respect to the efficient and profitable use of the firm's resources.
Correct Incorrect Correct answer

cash and noncash investing and financing transactions during the period.
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Question 19 of 50

19. Question

Three years ago, James Company purchased stock in Zebra Inc. at a cost of $100,000. This stock was sold for $150,000 during the current fiscal year. The result of this transaction should be shown in the Investing Activities Section of James’ Statement of Cash Flows as

Zero.
Correct Incorrect Correct answer

$50,000.
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$100,000.
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$150,000.
Correct Incorrect Correct answer

Correct

Incorrect
Question 20 of 50

20. Question

A change in the estimate for bad debts should be

treated as an error.
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handled retroactively.
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considered as an extraordinary item.
Correct Incorrect Correct answer

treated as affecting only the period of the change.
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Question 21 of 50

21. Question

Finer Foods Inc., a chain of supermarkets specializing in gourmet food, has been using the average cost method to value its inventory. During the current year, the company changed to the first-in, first-out method of inventory valuation. The president of the company reasoned that this change was appropriate since it would more closely match the flow of physical goods. This change should be reported on the financial statements as a

cumulative-effect type accounting change.
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retroactive-effect type accounting change.
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change in an accounting estimate.
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correction of an error.
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Question 22 of 50

22. Question

Cerawell Products Company is a ceramics manufacturer that is facing several challenges in its operations due to economic and industry conditions. The company is currently preparing its annual plan and budget. Which one of the following is subject to the least control by the management of Cerawell in the current fiscal year?

A new machine that was purchased this year has not helped reduce Cerawell's unfavorable labor efficiency variances.
Correct Incorrect Correct answer

A competitor has achieved an unexpected technological breakthrough that has given them a significant quality advantage, and has caused Cerawell to lose market share.
Correct Incorrect Correct answer

Vendors have asked that the contract price for the goods they supply to Cerawell be renegotiated and adjusted for inflation.
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Experienced employees have decided to terminate their employment with Cerawell and go to work for the competition.
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Question 23 of 50

23. Question

All of the following are advantages of the use of budgets in a management control system except that budgets

force management planning.
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provide performance criteria.
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promote communication and coordination within the organization.
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limit unauthorized expenditures.
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Question 24 of 50

24. Question

In developing the budget for the next year, which one of the following approaches would most likely result in a successful budget with the greatest amount of positive motivation and goal congruence?

Permit the divisional manager to develop the goal for the division that in the manager's view will generate the greatest amount of profits.
Correct Incorrect Correct answer

Have senior management develop the overall goals and permit the divisional manager to determine how these goals will be met.
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Have the divisional and senior management jointly develop goals and objectives while constructing the corporation's overall plan of operation.
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Have the divisional and senior management jointly develop goals and the divisional manager develop the implementation plan.
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Question 25 of 50

25. Question

Which one of the following statements concerning approaches for the budget development process is correct?

The authoritative approach to budgeting discourages strict adherence to strategic organizational goals.
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To prevent ambiguity (more than one interpretation) , once departmental budgeted goals have been developed, they should remain fixed even if the sales forecast upon which they are based proves to be wrong in the middle of the fiscal year.
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With the information technology available, the role of budgets as an organizational communication device has declined.
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Since department managers have the most detailed knowledge about organizational operations, they should use this information as the building blocks of the operating budget.
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Question 26 of 50

26. Question

Which one of the following items would most likely cause the planning and budgeting system to fail? The lack of

historical financial data.
Correct Incorrect Correct answer

input from several levels of management.
Correct Incorrect Correct answer

top management support.
Correct Incorrect Correct answer

adherence to rigid budgets during the year.
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Question 27 of 50

27. Question

All of the following are disadvantages of authoritative budgeting as opposed to participatory budgeting, except that it

may result in a budget that is not possible to achieve.
Correct Incorrect Correct answer

may limit the acceptance of proposed goals and objectives.
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reduces the communication between employees and management.
Correct Incorrect Correct answer

reduces the time required for budgeting.
Correct Incorrect Correct answer

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Question 28 of 50

28. Question

All of the following statements concerning standard costs are correct except that

standard costs are usually set for one year.
Correct Incorrect Correct answer

time and motion studies are often used to determine standard costs.
Correct Incorrect Correct answer

standard costs can be used in costing inventory accounts.
Correct Incorrect Correct answer

standard costs are usually stated in total, while budgeted costs are usually stated on a per-unit basis.
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Question 29 of 50

29. Question

One approach for developing standard costs incorporates communication, bargaining, and interaction among product line managers, the immediate supervisors for whom the standards are being developed, and the accountants and engineers, before the standards are accepted by top management. This approach would best be characterized as a(n)

imposed approach.
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authoritative approach.
Correct Incorrect Correct answer

engineering approach.
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participative approach.
Correct Incorrect Correct answer

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Question 30 of 50

30. Question

When compared with ideal standards, practical standards

produce lower per-unit product costs.
Correct Incorrect Correct answer

result in a less desirable basis for the development of budgets.
Correct Incorrect Correct answer

incorporate very generous allowances for spoilage and worker inefficiencies.
Correct Incorrect Correct answer

serve as a better motivating target for manufacturing personnel.
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Question 31 of 50

31. Question

Jura Corporation is developing standards for the next year. Currently XZ-26, one of the material components, is being purchased for $36.45 per unit. It is expected that the component’s cost will increase by approximately 10% next year and the price could range from $38.75 to $44.18 per unit depending on the quantity purchased. The appropriate standard for XZ-26 for next year should be set at the

current actual cost plus the forecasted 10% price increase.
Correct Incorrect Correct answer

lowest purchase price in the anticipated range to keep pressure on purchasing to always buy in the lowest price range.
Correct Incorrect Correct answer

highest price in the anticipated range to insure that there are only favorable purchase price variances.
Correct Incorrect Correct answer

price agreed upon by the purchasing manager and the appropriate level of company management.
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Question 32 of 50

32. Question

Which one of the following will allow a better use of standard costs and variance analysis to help improve managerial decision-making?

Company A does not differentiate between variable and fixed overhead in calculating its overhead variances.
Correct Incorrect Correct answer

Company B uses the prior year's average actual cost as the current year's standard.
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Company C investigates only negative variances.
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Company D constantly revises standards to reflect learning curves.
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Question 33 of 50

33. Question

After performing a thorough study of Michigan Company’s operations, an independent consultant determined that the firm’s labor standards were probably too tight. Which one of the following facts would be inconsistent with the consultant’s conclusion?

A review of performance reports revealed the presence of many unfavorable efficiency variances.
Correct Incorrect Correct answer

Michigan's budgeting process was well-defined and based on a bottom-up philosophy.
Correct Incorrect Correct answer

Management noted that minimal incentive bonuses have been paid in recent periods.
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Production supervisors found several significant fluctuations in manufacturing volume, with short-term increases on output being followed by rapid, sustained declines.
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Question 34 of 50

34. Question

For cost estimation simple regression differs from multiple regression in that simple regression uses only

one dependent variable, while multiple regression uses all available data to estimate the cost function.
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dependent variables, while multiple regression can use both dependent and independent variables.
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one independent variable, while multiple regression uses more than one independent variable.
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one dependent variable, while multiple regression uses more than one dependent variable.
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Question 35 of 50

35. Question

A company has accumulated data for the last 24 months in order to determine if there is an independent variable that could be used to estimate shipping costs. Three possible independent variables being considered are packages shipped, miles shipped, and pounds shipped. The quantitative technique that should be used to determine whether any of these independent variables might provide a good estimate for shipping costs is

flexible budgeting.
Correct Incorrect Correct answer

linear programming.
Correct Incorrect Correct answer

linear regression.
Correct Incorrect Correct answer

variable costing.
Correct Incorrect Correct answer

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Question 36 of 50

36. Question

Which one of the following techniques would most likely be used to analyze reductions in the time required to perform a task, as experience with that task increases?

Regression analysis.
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Learning curve analysis.
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Sensitivity analysis.
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Normal probability analysis.
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Question 37 of 50

37. Question

Aerosub Inc. has developed a new product for spacecraft that includes the manufacturing of a complex part. The manufacturing of this part requires a high degree of technical skill. Management believes there is a good opportunity for its technical force to learn and improve as they become accustomed to the production process. The production of the first unit requires 10,000 direct labor hours. If an 80% learning curve is used and eight units are produced, the cumulative average direct labor hours required per unit of the product will be

5,120 hours.
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6,400 hours.
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8,000 hours.
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10,000 hours.
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Question 38 of 50

38. Question

Aerosub Inc. has developed a new product for spacecraft that includes the manufacture of a complex part. The manufacturing of this part requires a high degree of technical skill. Management believes there is a good opportunity for its technical force to learn and improve as they become accustomed to the production process. The production of the first unit requires 10,000 direct labor hours. If an 80% learning curve is used, the cumulative direct labor hours required for producing a total of eight units would be

29,520 hours.
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40,960 hours.
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64,000 hours.
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80,000 hours.
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Question 39 of 50

39. Question

A manufacturing company required 800 direct labor hours to produce the first lot of four units of a new motor. Management believes that a 90% learning curve will be experienced over the next four lots of production. How many direct labor hours will be required to manufacture the next 12 units?

1,792.
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1,944.
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2,016.
Correct Incorrect Correct answer

2,160.
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Question 40 of 50

40. Question

A major disadvantage of a static budget is that

it is more difficult to develop than a flexible budget.
Correct Incorrect Correct answer

it is made for only one level of activity.
Correct Incorrect Correct answer

variances tend to be smaller than when flexible budgeting is used.
Correct Incorrect Correct answer

variances are more difficult to compute than when flexible budgeting is used.
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Question 41 of 50

41. Question

Arkin Co.’s controller has prepared a flexible budget for the year just ended, adjusting the original static budget for the unexpected large increase in the volume of sales. Arkin’s costs are mostly variable. The controller is pleased to note that both actual revenues and actual costs approximated amounts shown on the flexible budget. If actual revenues and actual costs are compared with amounts shown on the original (static) budget, what variances would arise?

Both revenue variances and cost variances would be favorable.
Correct Incorrect Correct answer

Revenue variances would be favorable and cost variances would be unfavorable.
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Revenue variances would be unfavorable and cost variances would be favorable.
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Both revenue variances and cost variances would be unfavorable.
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Question 42 of 50

42. Question

Use of a standard cost system can include all of the following advantages except that it

emphasizes qualitative characteristics.
Correct Incorrect Correct answer

assists in performance evaluation.
Correct Incorrect Correct answer

permits development of flexible budgeting.
Correct Incorrect Correct answer

allows employees to better understand what is expected of them.
Correct Incorrect Correct answer

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Question 43 of 50

43. Question

Which one of the following statements is correct concerning a flexible budget cost formula? Variable costs are stated

per unit and fixed costs are stated in total.
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in total and fixed costs are stated per unit.
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in total and fixed costs are stated in total.
Correct Incorrect Correct answer

per unit and fixed costs are stated per unit.
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Incorrect
Question 44 of 50

44. Question

Of the following pairs of variances found in a flexible budget report, which pair is most likely to be related?

Material price variance and variable overhead efficiency variance.
Correct Incorrect Correct answer

Labor rate variance and variable overhead efficiency variance.
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Material usage variance and labor efficiency variance.
Correct Incorrect Correct answer

Labor efficiency variance and fixed overhead volume variance.
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Question 45 of 50

45. Question

An advantage of using a flexible budget compared to a static budget is that in a flexible budget

standards can easily be changed to adjust to changing circumstances.
Correct Incorrect Correct answer

shortfalls in planned production are clearly presented.
Correct Incorrect Correct answer

fixed cost variances are more clearly presented.
Correct Incorrect Correct answer

budgeted costs for a given output level can be compared with actual costs for the same level of output.
Correct Incorrect Correct answer

Correct

Incorrect
Question 46 of 50

46. Question

The benefits of management by exception reporting include all of the following except a reduction In

reports production costs.
Correct Incorrect Correct answer

information overload.
Correct Incorrect Correct answer

reliance on advance planning.
Correct Incorrect Correct answer

unfocused management actions.
Correct Incorrect Correct answer

Correct

Incorrect
Question 47 of 50

47. Question

A company applies variable overhead based upon direct labor hours and has a variable overhead efficiency variance that is $25,000 favorable. A possible cause of this variance is that

higher skilled labor was used.
Correct Incorrect Correct answer

electricity rates were lower than expected.
Correct Incorrect Correct answer

less supplies were used than anticipated.
Correct Incorrect Correct answer

less units of finished goods were produced.
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Question 48 of 50

48. Question

Richter Company has an unfavorable materials efficiency (usage) variance for a particular month. Which one of the following is least likely to be the cause of this variance?

Inadequate training of the direct labor employees.
Correct Incorrect Correct answer

Poor performance of the shipping employees.
Correct Incorrect Correct answer

Poor design of the production process or product.
Correct Incorrect Correct answer

Poor quality of the raw materials.
Correct Incorrect Correct answer

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Question 49 of 50

49. Question

A company had a total labor variance of $15,000 favorable and a labor efficiency variance of $18,000 unfavorable. The labor price variance was

$3,000 favorable.
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$3,000 unfavorable.
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$33,000 favorable.
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$33,000 unfavorable.
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Question 50 of 50

50. Question

Cordell Company uses a standard cost system. On January 1 of the current year, Cordell budgeted fixed manufacturing overhead cost of $600,000 and production at 200,000 units. During the year, the firm produced 190,000 units and incurred fixed manufacturing overhead of $595,000. The production volume variance for the year was

$5,000 unfavorable.
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$10,000 unfavorable.
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$25,000 unfavorable.
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$30,000 unfavorable.
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Correct

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CMA P1 Mock Exam

Quiz Summary

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Results

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Categories

1. Question

The financial statements included in the annual report to the shareholders are least useful to which one of the following?

2. Question

Which one of the following would result in a decrease to cash flow in the indirect method of preparing a statement of cash flows?

3. Question

The statement of shareholders’ equity shows a

4. Question

When using the statement of cash flows to evaluate a company’s continuing solvency, the most important factor to consider is the cash

5. Question

A statement of financial position provides a basis for all of the following except

6. Question

The financial statement that provides a summary of the firm’s operations for a period of time is the

7. Question

All of the following are elements of an income statement except

8. Question

Dividends paid to company shareholders would be shown on the statement of cash flows as

9. Question

All of the following are classifications on the statement of cash flows except

10. Question

The purchase of fixed assets should be accounted for on the statement of cash flows as a(n)

11. Question

A statement of cash flows prepared using the indirect method would have cash activities listed in which one of the following orders?

12. Question

Kelli Company acquired land by assuming a mortgage for the full acquisition cost. This transaction should be disclosed on Kelli’s Statement of Cash Flows as a(n)

13. Question

Which one of the following should be classified as an operating activity on the statement of cash flows?

14. Question

All of the following are limitations to the information provided on the statement of financial position except the

15. Question

The most commonly used method for calculating and reporting a company’s net cash flow from operating activities on its statement of cash flows is the

16. Question

The presentation of the major classes of operating cash receipts (such as receipts from customers) less the major classes of operating cash disbursements (such as cash paid for merchandise) is best described as the

17. Question

When a fixed asset is sold for less than book value, which one of the following will decrease?

18. Question

The information reported in the statement of cash flows should help investors, creditors, and others to assess all of the following except the

19. Question

Three years ago, James Company purchased stock in Zebra Inc. at a cost of $100,000. This stock was sold for $150,000 during the current fiscal year. The result of this transaction should be shown in the Investing Activities Section of James’ Statement of Cash Flows as

20. Question

A change in the estimate for bad debts should be

21. Question

22. Question

23. Question

All of the following are advantages of the use of budgets in a management control system except that budgets

24. Question

In developing the budget for the next year, which one of the following approaches would most likely result in a successful budget with the greatest amount of positive motivation and goal congruence?

25. Question

Which one of the following statements concerning approaches for the budget development process is correct?

26. Question

Which one of the following items would most likely cause the planning and budgeting system to fail? The lack of

27. Question

All of the following are disadvantages of authoritative budgeting as opposed to participatory budgeting, except that it

28. Question

All of the following statements concerning standard costs are correct except that

29. Question

30. Question

When compared with ideal standards, practical standards

31. Question

32. Question

Which one of the following will allow a better use of standard costs and variance analysis to help improve managerial decision-making?

33. Question

After performing a thorough study of Michigan Company’s operations, an independent consultant determined that the firm’s labor standards were probably too tight. Which one of the following facts would be inconsistent with the consultant’s conclusion?

34. Question

For cost estimation simple regression differs from multiple regression in that simple regression uses only

35. Question

36. Question

Which one of the following techniques would most likely be used to analyze reductions in the time required to perform a task, as experience with that task increases?

37. Question

38. Question

39. Question

A manufacturing company required 800 direct labor hours to produce the first lot of four units of a new motor. Management believes that a 90% learning curve will be experienced over the next four lots of production. How many direct labor hours will be required to manufacture the next 12 units?

40. Question

A major disadvantage of a static budget is that