CMA PART 1 EXAM STUDY GUIDE
2026/2027 ACCURATE QUESTIONS
WITH CORRECT DETAILED
SOLUTIONS || 100% GUARANTEED
PASS NEWEST VERSION
Section 1: External Financial Reporting Decisions
1. Financial Accounting Standards Board (FASB)
Description: This question tests your understanding of the primary organization
responsible for establishing Generally Accepted Accounting Principles (GAAP) in the
United States.
Keywords: FASB, GAAP, standard-setting, US accounting.
Q: Which organization is primarily responsible for establishing GAAP for U.S.
companies?
A) International Accounting Standards Board (IASB)
B) Securities and Exchange Commission (SEC)
C) Financial Accounting Standards Board (FASB) ✅
D) American Institute of Certified Public Accountants (AICPA)
2. Accrual Basis Accounting
Description: This question assesses your knowledge of the revenue recognition
principle under accrual accounting.
,Keywords: Accrual basis, revenue recognition, GAAP, performance obligation.
Q: Under accrual basis accounting, revenue is recognized when:
A) Cash is received from the customer.
B) The performance obligation is satisfied. ✅
C) The order is placed by the customer.
D) The invoice is sent to the customer.
3. Statement of Cash Flows
Description: This question tests your ability to classify cash flows into the correct
activity category.
Keywords: Statement of cash flows, operating activities, investing activities, financing
activities.
Q: Which of the following is classified as a cash flow from investing activities?
A) Payment of dividends to shareholders.
B) Proceeds from the sale of equipment. ✅
C) Cash received from customers.
D) Issuance of common stock.
4. Inventory Valuation
Description: This question examines your understanding of the LIFO (Last-In, First-Out)
inventory costing method in a period of rising prices.
Keywords: LIFO, FIFO, inventory valuation, inflation, cost of goods sold.
Q: During a period of rising prices, which inventory method will result in the highest
cost of goods sold?
A) First-In, First-Out (FIFO)
B) Last-In, First-Out (LIFO) ✅
C) Weighted Average
D) Specific Identification
5. Revenue Recognition (ASC 606)
Description: This question covers the five-step model for revenue recognition under
ASC 606.
,Keywords: ASC 606, revenue recognition, performance obligation, transaction price.
Q: What is the first step in the five-step revenue recognition model under ASC 606?
A) Determine the transaction price.
B) Identify the contract with the customer. ✅
C) Recognize revenue when the performance obligation is satisfied.
D) Allocate the transaction price to performance obligations.
6. Property, Plant, and Equipment (PPE)
Description: This question tests your knowledge of depreciation methods and their
impact on net income in the early years of an asset's life.
Keywords: Depreciation, straight-line, double-declining balance, accelerated
depreciation.
Q: Which depreciation method results in the highest depreciation expense in the first
year of an asset's life?
A) Straight-line
B) Units-of-production
C) Double-declining balance ✅
D) Sum-of-the-years'-digits
7. Bonds Payable
Description: This question assesses your understanding of bond issuance and the
effective interest rate method.
Keywords: Bonds, premium, discount, effective interest rate, amortization.
Q: When a bond is issued at a discount, the effective interest rate is:
A) Lower than the stated interest rate.
B) Equal to the stated interest rate.
C) Higher than the stated interest rate. ✅
D) Unrelated to the stated interest rate.
8. Leases (ASC 842)
Description: This question tests your knowledge of lease classification from the
lessee's perspective.
, Keywords: ASC 842, finance lease, operating lease, lessee, right-of-use asset.
Q: Under ASC 842, a lessee should classify a lease as a finance lease if:
A) The lease term is less than 12 months.
B) The present value of lease payments is 90% or more of the fair value of the asset. ✅
C) The lease does not transfer ownership of the asset.
D) The asset is of a specialized nature with no alternative use.
9. Income Taxes
Description: This question examines the concept of deferred tax liabilities.
Keywords: Deferred tax, temporary differences, taxable income, financial income.
Q: A deferred tax liability is most likely created when:
A) Taxable income exceeds financial income.
B) Financial income exceeds taxable income. ✅
C) There is a permanent difference between tax and financial income.
D) A company has a net operating loss carryforward.
10. Stockholders' Equity
Description: This question tests your understanding of the accounting for treasury
stock.
Keywords: Treasury stock, stockholders' equity, cost method, par value method.
Q: When a company purchases its own stock as treasury stock, the effect on total
stockholders' equity is:
A) An increase.
B) A decrease. ✅
C) No effect.
D) Depends on the method used.
11. Earnings Per Share (EPS)
Description: This question assesses your ability to calculate basic earnings per share.
Keywords: EPS, basic EPS, diluted EPS, weighted average shares.
Q: Basic earnings per share is calculated as:
A) Net income / Common shares outstanding at year-end.
2026/2027 ACCURATE QUESTIONS
WITH CORRECT DETAILED
SOLUTIONS || 100% GUARANTEED
PASS NEWEST VERSION
Section 1: External Financial Reporting Decisions
1. Financial Accounting Standards Board (FASB)
Description: This question tests your understanding of the primary organization
responsible for establishing Generally Accepted Accounting Principles (GAAP) in the
United States.
Keywords: FASB, GAAP, standard-setting, US accounting.
Q: Which organization is primarily responsible for establishing GAAP for U.S.
companies?
A) International Accounting Standards Board (IASB)
B) Securities and Exchange Commission (SEC)
C) Financial Accounting Standards Board (FASB) ✅
D) American Institute of Certified Public Accountants (AICPA)
2. Accrual Basis Accounting
Description: This question assesses your knowledge of the revenue recognition
principle under accrual accounting.
,Keywords: Accrual basis, revenue recognition, GAAP, performance obligation.
Q: Under accrual basis accounting, revenue is recognized when:
A) Cash is received from the customer.
B) The performance obligation is satisfied. ✅
C) The order is placed by the customer.
D) The invoice is sent to the customer.
3. Statement of Cash Flows
Description: This question tests your ability to classify cash flows into the correct
activity category.
Keywords: Statement of cash flows, operating activities, investing activities, financing
activities.
Q: Which of the following is classified as a cash flow from investing activities?
A) Payment of dividends to shareholders.
B) Proceeds from the sale of equipment. ✅
C) Cash received from customers.
D) Issuance of common stock.
4. Inventory Valuation
Description: This question examines your understanding of the LIFO (Last-In, First-Out)
inventory costing method in a period of rising prices.
Keywords: LIFO, FIFO, inventory valuation, inflation, cost of goods sold.
Q: During a period of rising prices, which inventory method will result in the highest
cost of goods sold?
A) First-In, First-Out (FIFO)
B) Last-In, First-Out (LIFO) ✅
C) Weighted Average
D) Specific Identification
5. Revenue Recognition (ASC 606)
Description: This question covers the five-step model for revenue recognition under
ASC 606.
,Keywords: ASC 606, revenue recognition, performance obligation, transaction price.
Q: What is the first step in the five-step revenue recognition model under ASC 606?
A) Determine the transaction price.
B) Identify the contract with the customer. ✅
C) Recognize revenue when the performance obligation is satisfied.
D) Allocate the transaction price to performance obligations.
6. Property, Plant, and Equipment (PPE)
Description: This question tests your knowledge of depreciation methods and their
impact on net income in the early years of an asset's life.
Keywords: Depreciation, straight-line, double-declining balance, accelerated
depreciation.
Q: Which depreciation method results in the highest depreciation expense in the first
year of an asset's life?
A) Straight-line
B) Units-of-production
C) Double-declining balance ✅
D) Sum-of-the-years'-digits
7. Bonds Payable
Description: This question assesses your understanding of bond issuance and the
effective interest rate method.
Keywords: Bonds, premium, discount, effective interest rate, amortization.
Q: When a bond is issued at a discount, the effective interest rate is:
A) Lower than the stated interest rate.
B) Equal to the stated interest rate.
C) Higher than the stated interest rate. ✅
D) Unrelated to the stated interest rate.
8. Leases (ASC 842)
Description: This question tests your knowledge of lease classification from the
lessee's perspective.
, Keywords: ASC 842, finance lease, operating lease, lessee, right-of-use asset.
Q: Under ASC 842, a lessee should classify a lease as a finance lease if:
A) The lease term is less than 12 months.
B) The present value of lease payments is 90% or more of the fair value of the asset. ✅
C) The lease does not transfer ownership of the asset.
D) The asset is of a specialized nature with no alternative use.
9. Income Taxes
Description: This question examines the concept of deferred tax liabilities.
Keywords: Deferred tax, temporary differences, taxable income, financial income.
Q: A deferred tax liability is most likely created when:
A) Taxable income exceeds financial income.
B) Financial income exceeds taxable income. ✅
C) There is a permanent difference between tax and financial income.
D) A company has a net operating loss carryforward.
10. Stockholders' Equity
Description: This question tests your understanding of the accounting for treasury
stock.
Keywords: Treasury stock, stockholders' equity, cost method, par value method.
Q: When a company purchases its own stock as treasury stock, the effect on total
stockholders' equity is:
A) An increase.
B) A decrease. ✅
C) No effect.
D) Depends on the method used.
11. Earnings Per Share (EPS)
Description: This question assesses your ability to calculate basic earnings per share.
Keywords: EPS, basic EPS, diluted EPS, weighted average shares.
Q: Basic earnings per share is calculated as:
A) Net income / Common shares outstanding at year-end.
