CMA Certified Management Accountant
Part 1 & 2 Prep 2026/2027 – Complete
Exam-Style Questions | 100% Verified |
Detailed Rationales – Pass Guaranteed –
A+ Graded
CMA Part 1 – Financial Planning, Performance, & Analytics (Questions 1–50)
1. Under IFRS, which statement about the statement of cash flows is correct?
A) Dividends paid must be classified as operating cash flows
B) Interest received may be classified as operating or investing
C) Interest paid is always financing
D) Taxes paid are always investing
Rationale: IFRS allows interest received as operating or investing; interest paid as
operating or financing; dividends received as operating or investing; dividends
paid as operating or financing. US GAAP is more prescriptive.
2. A company uses LIFO during rising prices. Compared to FIFO, LIFO will
result in:
A) Higher net income and higher inventory
B) Lower net income and lower inventory
C) Higher net income and lower inventory
D) Lower net income and higher inventory
,Rationale: LIFO matches most recent (higher) costs to revenue → higher COGS
→ lower NI. Ending inventory valued at older (lower) costs → lower inventory.
3. Which is a primary disadvantage of the payback period method?
A) It ignores the time value of money
B) It ignores cash flows after the payback period
C) Both A and B
D) It is difficult to compute
Rationale: Payback period ignores TVM AND cash flows after payback → major
weaknesses.
4. A company has actual overhead $500,000, applied overhead $480,000. The
variance is:
A) $20,000 overapplied
B) **$20,000 underapplied**
C) $20,000 favorable
D) No variance
*Rationale: Underapplied = actual > applied → $20,000 underapplied.*
5. Which budget is prepared FIRST in the master budgeting process?
A) Cash budget
B) Production budget
C) Sales budget
D) Direct materials budget
Rationale: All operating budgets begin with sales forecast (sales budget).
6. A favorable direct labor efficiency variance indicates:
A) Actual wage rate was lower than standard
B) Actual labor hours were less than standard hours for actual output
C) Actual output was higher than budgeted
D) Standard rate was increased
, Rationale: Efficiency variance = (Actual hours – Standard hours) × Standard rate.
Favorable → actual hours < standard.
7. Which cost is classified as a period cost (non-manufacturing)?
A) Direct materials
B) Factory depreciation
C) Sales commissions
D) Indirect labor
Rationale: Period costs = selling, general, administrative (SG&A). Sales
commissions are selling costs.
8. Absorption costing differs from variable costing in the treatment of:
A) Direct materials
B) Variable overhead
C) Fixed overhead
D) Direct labor
Rationale: Absorption includes fixed MOH in product cost; variable costing treats
fixed MOH as period expense.
**9. A company has sales of $1,000,000, variable costs $600,000, fixed costs
$300,000. Operating leverage?**
A) 1.33
B) **4.0**
C) 2.0
D) 0.75
*Rationale: Contribution margin = $400,000; Operating income = $100,000;
Degree of operating leverage = CM / OI = 4.0.*
10. Which internal control component includes policies to mitigate risks?
A) Control environment
B) Risk assessment
C) Control activities
Part 1 & 2 Prep 2026/2027 – Complete
Exam-Style Questions | 100% Verified |
Detailed Rationales – Pass Guaranteed –
A+ Graded
CMA Part 1 – Financial Planning, Performance, & Analytics (Questions 1–50)
1. Under IFRS, which statement about the statement of cash flows is correct?
A) Dividends paid must be classified as operating cash flows
B) Interest received may be classified as operating or investing
C) Interest paid is always financing
D) Taxes paid are always investing
Rationale: IFRS allows interest received as operating or investing; interest paid as
operating or financing; dividends received as operating or investing; dividends
paid as operating or financing. US GAAP is more prescriptive.
2. A company uses LIFO during rising prices. Compared to FIFO, LIFO will
result in:
A) Higher net income and higher inventory
B) Lower net income and lower inventory
C) Higher net income and lower inventory
D) Lower net income and higher inventory
,Rationale: LIFO matches most recent (higher) costs to revenue → higher COGS
→ lower NI. Ending inventory valued at older (lower) costs → lower inventory.
3. Which is a primary disadvantage of the payback period method?
A) It ignores the time value of money
B) It ignores cash flows after the payback period
C) Both A and B
D) It is difficult to compute
Rationale: Payback period ignores TVM AND cash flows after payback → major
weaknesses.
4. A company has actual overhead $500,000, applied overhead $480,000. The
variance is:
A) $20,000 overapplied
B) **$20,000 underapplied**
C) $20,000 favorable
D) No variance
*Rationale: Underapplied = actual > applied → $20,000 underapplied.*
5. Which budget is prepared FIRST in the master budgeting process?
A) Cash budget
B) Production budget
C) Sales budget
D) Direct materials budget
Rationale: All operating budgets begin with sales forecast (sales budget).
6. A favorable direct labor efficiency variance indicates:
A) Actual wage rate was lower than standard
B) Actual labor hours were less than standard hours for actual output
C) Actual output was higher than budgeted
D) Standard rate was increased
, Rationale: Efficiency variance = (Actual hours – Standard hours) × Standard rate.
Favorable → actual hours < standard.
7. Which cost is classified as a period cost (non-manufacturing)?
A) Direct materials
B) Factory depreciation
C) Sales commissions
D) Indirect labor
Rationale: Period costs = selling, general, administrative (SG&A). Sales
commissions are selling costs.
8. Absorption costing differs from variable costing in the treatment of:
A) Direct materials
B) Variable overhead
C) Fixed overhead
D) Direct labor
Rationale: Absorption includes fixed MOH in product cost; variable costing treats
fixed MOH as period expense.
**9. A company has sales of $1,000,000, variable costs $600,000, fixed costs
$300,000. Operating leverage?**
A) 1.33
B) **4.0**
C) 2.0
D) 0.75
*Rationale: Contribution margin = $400,000; Operating income = $100,000;
Degree of operating leverage = CM / OI = 4.0.*
10. Which internal control component includes policies to mitigate risks?
A) Control environment
B) Risk assessment
C) Control activities
