CMA Exam (Part 1)
When a fixed asset is sold for less than book value, which one of the following will decrease?
A) Total Current Assets
B) Current Ratio
C) Net Profit
D) Net Working Capital
C) Net Profit
The primary responsibility for establishing and maintaining internal control rests with?
A) The external auditor
B) Management
C) The controller
D) The treasurer
B) Management
St. Louis' Gateway Arch is officially named for what US president?
A) James Madison
B) Thomas Jefferson
C) Richard Nixon
D) George Washington
C) Thomas Jefferson
Pro forma financial statements are part of the budgeting process. Normally, the last pro forma statement prepared is the?
A) Capital expenditure plan
B) Income Statement
C) Statement of cost of goods sold
D) Statement of cash flows
D) Statement of cash flows
In a management decision process, the cost measurement of the benefits sacrificed due to selecting an alternative use of resources is most often referred to as a(n)?
A) Relevant Costs
B) Sunk Costs
C) Opportunity Costs
D) Differential Costs
C) Opportunity Costs
In periods of rising costs, which one of the following inventory cost flow assumptions will result in a higher cost of sales?
A) FIFO
B) LIFO
C) Weighted Average
D) Moving Average
B) LIFO
Confidential data can be securely transmitted over the internet by using
A) Single-use Password
B) Firewalls
C) Encryption
D) Digital Signatures
C) Encryption
Which country were the 2016 Summer Olympic Games held in?
A) Mexico
B) Germany
C) Brazil
D) China
C) Brazil
Breakeven quantity is defined as the volume of output at which revenues are equal to?
A) Marginal Costs
B) Total Costs
C) Variable Costs
D) Fixed Costs
B) Total Costs
For a given investment project, the interest rate at which the present value of the cash inflows equals the present value of the cash outflows is called the
A) Hurdle Rate
B) Payback Rate
C) Internal Rate of Return
D) Cost of Capital
C) Internal Rate of Return
Randall Company uses standard costing and flexible budgeting and is evaluating its direct labor. The total budget variance can usually be broken down into two other variances identified as the?
A) direct labor rate variance and direct labor efficiency variance.
B) direct labor cost variance and the direct labor volume variance.
C) direct labor rate variance and direct labor volume variance.
D) direct labor cost variance and direct labor efficiency variance.
A) direct labor rate variance and direct labor efficiency variance.
If a corporation may be violating federal and state laws governing environmental concerns, which one of the following types of audit will best assist in ascertaining whether such situations may exist?
A) Operating Audit
B) Compliance Audit
C) Financial Audit
D) Management Audit
B) Compliance Audit
Trinidad and Tobago is considered to be part of which geographical region?
A) Caribbean
B) Southern Europe
C) South America
D) Central America
A) Caribbean
The interest expense for a company is equal to its earnings before interest and taxes (EBIT). The company's tax rate is 40%. The company's times-interest earned ratio is equal to?
A) 2.0
B) 1.0
C) 0.6
D) 1.2
B) 1.0
Vega Company increased its allowance for uncollectable accounts. This adjustment will?
A) Increase the acid test ratio
B) Increase working capital
C) Reduce debt-to-asset ratio
D) Reduce the current ratio
D) Reduce the current ratio
A firm uses a standard cost system and applies factory overhead to products on the basis of direct labor hours. If the firm recently reported a favorable direct labor efficiency variance, then
A) Overhead spending variance must be favorable
B) Overhead efficiency variance must be favorable
C) Fixed overhead volume variance must be unfavorable
D) Direct labor rate variance must be favorable
B) Overhead efficiency variance must be favorable
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?
A) Regression analysis.
B) Learning curve analysis.
C) Sensitivity analysis.
D) Normal probability analysis.
B) Learning curve analysis
In "Jurassic Park", the park is located on an island off the coast of what country?
A) Colombia
B) Panama
C) Cuba
D) Costa Rica
D) Costa Rica
A major bank has offered to develop and operate a lock-box system for Powell Company at a cost of $90,000 per year. Powell averages 300 receipts per day at an average of $2,500 each. Its short-term interest cost is 8% per year. Using a 360-day year, what reduction in average collection time would be needed in order to justify the lock-box system?
A) 0.67 days.
B) 1.20 days.
C) 1.25 days.
D) 1.50 days.
D) 1.50 days
A proper segregation of duties requires that an individual...
A) Authorizing a transaction, records it.
B) Authorizing a transaction, maintain custody of the asset that resulted from the transaction.
C) Maintaining custody of an asset be entitled to access the accounting records for the asset.
D) Recording a transaction not compare the accounting record of the asset with the asset itself
D) Recording a transaction not compare the accounting record of the asset with the asset itself
Ming Company has budgeted sales at 6,300 units for the next fiscal year and desires to have 590 good units on hand at the end of that year. Beginning inventory is 470 units. Ming has found from past experience that 10% of all units produced do not pass final inspection, and must, therefore, be destroyed. How many units should Ming plan to produce in the next fiscal year?
A) 6,890
B) 7,062
C) 7,133
D) 7,186
C) 7,133
Control procedures over accounting information systems are referred to as general controls or application controls. The primary objective of application controls in a computer environment is to,
A) Maintain the accuracy of the inputs, files, and outputs for the specific applications
B) Ensure the separations of incompatible functions in the data processing departments
C) Provide controls over the electronic functioning of the hardware
D) Plan for the protection of the facilities and back up for the system
A) Maintain the accuracy of the inputs, files, and outputs for the specific applications
What is the fear of having to cook called?
A) Mageirocophobia
B) Turophobia
C) Nomophobia
D) Triskaidekaphobia
A) Mageirocophobia
Frasier Products has been growing at a rate of 10% per year and expects this growth to continue and produce earnings per share of $4.00 next year. The firm has a dividend payout ratio of 35% and a beta value of 1.25. If the risk-free rate is 7% and the return on the market is 15%, what is the expected current market value of Frasier’s common stock?
A) 14.00
B) 16.00
C) 20.00
D) 24.00
C) 20.00
Allstar Company invests in a project with expected cash inflows of $9,000 per year for four years. All cash flows occur at year-end. The required return on investment is 9%. If the project generates a net present value (NPV) of $3,000, what is the amount of the initial investment in the project?
A) $11,253
B) $13,236
C) $26,160
D) $29,160
C) $26,160