7/19/22, 3:26 PM CMA Exam Review - Part 1 - Assessment Review
Question 1
1.A.2.p
MQ2946_0720
LOS: 1.A.2.p
Lesson Reference: General Liabilities
Difficulty: easy
Bloom Code: 1
Which method for warranty accounting requires the organization to record deferred revenue?
Assurance Warranty approach.
Correct
Service Warranty approach.
Prepaid Warranty approach.
Special Warranty approach.
Rationale
Assurance Warranty approach.
This answer is incorrect. The Assurance Warranty approach does not require the organization to record deferred revenue.
Rationale
Service Warranty approach.
The Service Warranty approach requires the organization to record deferred revenue and record the revenue across the life of the warranty
contract. This occurs when an organization sells an extended warranty on an item.
Rationale
Prepaid Warranty approach.
This answer is incorrect. The Prepaid Warranty approach is not a real method of accounting for warranties.
Rationale
Special Warranty approach.
This answer is incorrect. The Special Warranty approach is not a real method of accounting for warranties.
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,7/19/22, 3:26 PM CMA Exam Review - Part 1 - Assessment Review
Question 2
1.A.2.t
leases.tb.010_0720
LOS: 1.A.2.t
Lesson Reference: Leases
Difficulty: medium
Bloom Code: 3
The underlying asset for Lease A is so specialized for the lessee that it is expected to have no alternative future use to the lessor at the end of the lease
term; however, Lease A does not contain a bargain purchase option. The lease term for Lease B is less than 75% of the estimated economic life of the
leased property, but Lease B does transfer ownership of the property to the lessee by the end of the lease term. How should the lessee classify Lease A
and Lease B, respectively?
Correct
Finance lease; Finance lease
Finance lease; Operating lease
Your Answer
Operating lease; Finance lease
Operating lease; Operating lease
Rationale
Finance lease; Finance lease
Because the underlying asset for Lease A is so specialized for the lessee that it is expected to have no alternative future use to the lessor at the end
of the lease term, Lease A is classified as a finance lease. Because Lease B transfers ownership of the property to the lessee by the end of the lease
term, Lease B is classified as a finance lease.
Rationale
Finance lease; Operating lease
This answer is incorrect. Because Lease B transfers ownership of the property to the lessee by the end of the lease term, Lease B is classified as a
finance lease.
Rationale
Operating lease; Finance lease
This answer is incorrect. Because the underlying asset for Lease A is so specialized for the lessee that it is expected to have no alternative future use
to the lessor at the end of the lease term, Lease A is classified as a finance lease.
Rationale
Operating lease; Operating lease
This answer is incorrect. Both leases are finance leases. Evaluate each lease based on the five criteria to determine if a lease should be recorded as
a finance lease.
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,7/19/22, 3:26 PM CMA Exam Review - Part 1 - Assessment Review
Question 3
1.A.2.y
aq.rev.rec.012_1809
LOS: 1.A.2.y
Lesson Reference: Revenue Recognition
Difficulty: medium
Bloom Code: 2
Which of the following would preclude a company from identifying a contract for purposes of step 1 in the revenue recognition process?
The agreement with the customer is oral.
Your Answer
The company uses a graded price list based on volume.
The company sells multiple items under one contract.
Correct
The collectability of substantially all of the transaction price is not probable.
Rationale
The agreement with the customer is oral.
This answer is incorrect. Although there is not a written contract, oral arrangements can be identified as a contract for the recognition of revenue.
Rationale
The company uses a graded price list based on volume.
This answer is incorrect. This situation would require an estimate of the transaction price, but would not preclude identification of the contract for
revenue recognition purposes.
Rationale
The company sells multiple items under one contract.
This answer is incorrect. This situation would require careful identification of the performance obligations in the contract, but would not preclude
identification of the contract for revenue recognition purposes.
Rationale
The collectability of substantially all of the transaction price is not probable.
This answer is correct. The arrangement would not be considered a contract for purposes of revenue recognition. Revenue could not be recognized
until nonrefundable consideration is received and the organization has satisfied its performance obligations.
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, 7/19/22, 3:26 PM CMA Exam Review - Part 1 - Assessment Review
Question 4
1.A.2.ff
aq.ifrs.008_1904
LOS: 1.A.2.ff
Lesson Reference: IFRS Differences in Accounting
Difficulty: easy
Bloom Code: 2
Coveted Candy (CC), a well-known candy manufacturer and distributor, follows IFRS. CC recently entered into a lease for a new commerical mixer. The
mixer is worth $2,000 which is less than 1% of the fair value of the assets of CC. How should CC treat this lease?
CC should record an asset as part of the lease signing, but not a liability because the lease is for an immaterial asset.
CC should record a liability as part of the lease signing, but not an asset because the lease is for an immaterial asset.
Your Answer
CC is required to record an asset and a liability for all leases under IFRS.
Correct
CC should expense the payments under the lease as incurred because the leased asset is immaterial.
Rationale
CC should record an asset as part of the lease signing, but not a liability because the lease is for an immaterial asset.
IFRS does not require the recording of an asset or liability for leases of immaterial assets.
Rationale
CC should record a liability as part of the lease signing, but not an asset because the lease is for an immaterial asset.
IFRS does not require the recording of an asset or liability for leases of immaterial assets.
Rationale
CC is required to record an asset and a liability for all leases under IFRS.
IFRS does not require the recording of an asset or liability for leases of immaterial assets.
Rationale
CC should expense the payments under the lease as incurred because the leased asset is immaterial.
IFRS does not require the recording of an asset or liability for leases of immaterial assets. Rather, the payments under these leases are expensed as
incurred.
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Question 1
1.A.2.p
MQ2946_0720
LOS: 1.A.2.p
Lesson Reference: General Liabilities
Difficulty: easy
Bloom Code: 1
Which method for warranty accounting requires the organization to record deferred revenue?
Assurance Warranty approach.
Correct
Service Warranty approach.
Prepaid Warranty approach.
Special Warranty approach.
Rationale
Assurance Warranty approach.
This answer is incorrect. The Assurance Warranty approach does not require the organization to record deferred revenue.
Rationale
Service Warranty approach.
The Service Warranty approach requires the organization to record deferred revenue and record the revenue across the life of the warranty
contract. This occurs when an organization sells an extended warranty on an item.
Rationale
Prepaid Warranty approach.
This answer is incorrect. The Prepaid Warranty approach is not a real method of accounting for warranties.
Rationale
Special Warranty approach.
This answer is incorrect. The Special Warranty approach is not a real method of accounting for warranties.
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,7/19/22, 3:26 PM CMA Exam Review - Part 1 - Assessment Review
Question 2
1.A.2.t
leases.tb.010_0720
LOS: 1.A.2.t
Lesson Reference: Leases
Difficulty: medium
Bloom Code: 3
The underlying asset for Lease A is so specialized for the lessee that it is expected to have no alternative future use to the lessor at the end of the lease
term; however, Lease A does not contain a bargain purchase option. The lease term for Lease B is less than 75% of the estimated economic life of the
leased property, but Lease B does transfer ownership of the property to the lessee by the end of the lease term. How should the lessee classify Lease A
and Lease B, respectively?
Correct
Finance lease; Finance lease
Finance lease; Operating lease
Your Answer
Operating lease; Finance lease
Operating lease; Operating lease
Rationale
Finance lease; Finance lease
Because the underlying asset for Lease A is so specialized for the lessee that it is expected to have no alternative future use to the lessor at the end
of the lease term, Lease A is classified as a finance lease. Because Lease B transfers ownership of the property to the lessee by the end of the lease
term, Lease B is classified as a finance lease.
Rationale
Finance lease; Operating lease
This answer is incorrect. Because Lease B transfers ownership of the property to the lessee by the end of the lease term, Lease B is classified as a
finance lease.
Rationale
Operating lease; Finance lease
This answer is incorrect. Because the underlying asset for Lease A is so specialized for the lessee that it is expected to have no alternative future use
to the lessor at the end of the lease term, Lease A is classified as a finance lease.
Rationale
Operating lease; Operating lease
This answer is incorrect. Both leases are finance leases. Evaluate each lease based on the five criteria to determine if a lease should be recorded as
a finance lease.
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,7/19/22, 3:26 PM CMA Exam Review - Part 1 - Assessment Review
Question 3
1.A.2.y
aq.rev.rec.012_1809
LOS: 1.A.2.y
Lesson Reference: Revenue Recognition
Difficulty: medium
Bloom Code: 2
Which of the following would preclude a company from identifying a contract for purposes of step 1 in the revenue recognition process?
The agreement with the customer is oral.
Your Answer
The company uses a graded price list based on volume.
The company sells multiple items under one contract.
Correct
The collectability of substantially all of the transaction price is not probable.
Rationale
The agreement with the customer is oral.
This answer is incorrect. Although there is not a written contract, oral arrangements can be identified as a contract for the recognition of revenue.
Rationale
The company uses a graded price list based on volume.
This answer is incorrect. This situation would require an estimate of the transaction price, but would not preclude identification of the contract for
revenue recognition purposes.
Rationale
The company sells multiple items under one contract.
This answer is incorrect. This situation would require careful identification of the performance obligations in the contract, but would not preclude
identification of the contract for revenue recognition purposes.
Rationale
The collectability of substantially all of the transaction price is not probable.
This answer is correct. The arrangement would not be considered a contract for purposes of revenue recognition. Revenue could not be recognized
until nonrefundable consideration is received and the organization has satisfied its performance obligations.
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, 7/19/22, 3:26 PM CMA Exam Review - Part 1 - Assessment Review
Question 4
1.A.2.ff
aq.ifrs.008_1904
LOS: 1.A.2.ff
Lesson Reference: IFRS Differences in Accounting
Difficulty: easy
Bloom Code: 2
Coveted Candy (CC), a well-known candy manufacturer and distributor, follows IFRS. CC recently entered into a lease for a new commerical mixer. The
mixer is worth $2,000 which is less than 1% of the fair value of the assets of CC. How should CC treat this lease?
CC should record an asset as part of the lease signing, but not a liability because the lease is for an immaterial asset.
CC should record a liability as part of the lease signing, but not an asset because the lease is for an immaterial asset.
Your Answer
CC is required to record an asset and a liability for all leases under IFRS.
Correct
CC should expense the payments under the lease as incurred because the leased asset is immaterial.
Rationale
CC should record an asset as part of the lease signing, but not a liability because the lease is for an immaterial asset.
IFRS does not require the recording of an asset or liability for leases of immaterial assets.
Rationale
CC should record a liability as part of the lease signing, but not an asset because the lease is for an immaterial asset.
IFRS does not require the recording of an asset or liability for leases of immaterial assets.
Rationale
CC is required to record an asset and a liability for all leases under IFRS.
IFRS does not require the recording of an asset or liability for leases of immaterial assets.
Rationale
CC should expense the payments under the lease as incurred because the leased asset is immaterial.
IFRS does not require the recording of an asset or liability for leases of immaterial assets. Rather, the payments under these leases are expensed as
incurred.
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