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CMA Entrance Exam Questions and Answers 2023.
Strategic Management
1. (-) The main purpose of a company’s mission statement is to provide a context and
direction for
a) legislative lobby groups.
b) product/market/technology areas.
c) inside claimants of the company.
d) outside claimants of the company.
e) strategy formulation.
2. Continuous strategy evaluation is important for companies today because
a) international markets are fluctuating.
b) product development life cycles are shorter.
c) foreign competition is strong.
d) both a) and b) above.
e) all of a), b) and c) above.
3. (-) A diversification strategy focuses on
a) existing customers and existing products and services.
b) existing customers and new products and services.
c) new customers and existing products and services.
d) new customers and new products and services.
e) none of the above.
4. Which of the following statements about barriers to entry is FALSE?
a) It determines the extent of the threat of new entrants to existing competitors.
b) It typically includes economies of scale, product differentiation, and capital costs.
c) It cannot be created by government policy.
d) Customer loyalty is typically not a factor in creating a barrier to entry.
e) Both c) and d) above.
5. Which of the following best describes the concept of a distinctive competence?
a) The technical know-how that a company uses to create leading edge product
features.
b) Something a company does very well relative to competitors.
c) A primary activity that the company uses to create value for customers.
d) The ability of a company to perform an activity consistently well and at an acceptable
cost.
e) Something a company does well relative to other internal activities.
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,6. In completing a SWOT (strengths, weaknesses, opportunities, threats) analysis, which of
the following is NOT an example of an external threat?
a) Growing bargaining power of the company’s suppliers.
b) Weakening brand image in relation to competitors.
c) Shifting of buyer preferences to a competing industry.
d) Election of a new federal government.
e) Higher than expected inflation rate.
7. In which of the following situations would a joint venture strategy be LEAST useful?
a) The available opportunity is very complex and risky.
b) Broader knowledge and skills are needed in a new industry.
c) The supply chain is short and established.
d) It is difficult to gain access into a foreign market.
e) Two relatively small companies are having difficulty competing with a large company.
8. Research in the widget industry has revealed that:
i) there are many manufacturers where the smaller manufacturers compete on
product differentiation and high quality, whereas the larger companies compete
on price and availability;
ii) the raw materials required for this industry are plentiful and provided by many
suppliers;
iii) the manufacturing process is highly labour intensive, mainly consisting of low-
skilled labour.
Based on these findings, what can be concluded about the widget industry?
a) Entry barriers in this industry are high.
b) Consumer bargaining power is high.
c) Supplier bargaining power is low.
d) Rivalry among competing suppliers in this industry is low.
e) Consumers place more value on product quality than price in this industry.
9. A company that currently competes in a single industry is seeking to reduce its
dependency on that industry by expanding into other industries. This company is using a
a) forward integration strategy.
b) diversification strategy.
c) horizontal integration strategy.
d) differentiation strategy.
e) backward integration strategy.
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10. Which of the following statements about the implementation of balanced scorecard in an
organization is correct?
a) The scorecard should include only four performance perspectives, including learning
and growth, internal business process, customers and financial.
b) Performance perspectives and indicators included in an organization’s corporate
scorecard, divisional scorecard and individual employee scorecard should be
identical.
c) Performance perspectives and indicators of critical success factors should be driven
by the organization’s mission, vision, and strategy.
d) The scorecard should include a balanced set of financial, quantitative, objective, and
lagging indicators.
e) The cause-and-effect relationship among the different performance perspectives
must be precise and tested.
Risk Management and Governance
11. When internal controls are implemented in an organization, there is often resistance
from individuals. One way to minimize resistance to internal controls is to
a) have an open forum for employees to suggest implementation methods.
b) ensure support from ownership and the Board of Directors.
c) assign the task of implementing the controls to an impartial staff person who has no
direct relationship or authority over the affected individuals.
d) both a) and b) above.
e) both b) and c) above.
12. Which of the following is NOT a typical role of an audit committee?
a) Decide which public accounting firm to retain.
b) Resolve conflicts between the public accounting firm and management.
c) Discuss and review findings of internal audits.
d) Delegate audit responsibilities to senior management.
e) Determine the scope of services of the public accounting firm.
13. The main purpose of an internal control system within an organization is to
a) provide timely and relevant information to the organization about its goals and
objectives.
b) safeguard the assets within the organization.
c) confirm the reliability and integrity of information within the organization.
d) ensure efficient use of resources.
e) ensure the behaviour of employees are consistent with organizational objectives and
strategies.
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, 14. Effective internal control in a small company that has an insufficient number of
employees to permit proper division of responsibilities can best be enhanced by
a) employment of temporary personnel to aid the separation of duties.
b) the continuous review of all aspects of the business by the owner of the business,
including the output of the accounting system.
c) engaging an outside accountant to perform the monthly accounting duties.
d) delegation of a full, clear-cut responsibility to each employee for the functions
assigned to each.
e) ensuring that the accounting function takes precedence over all other functions in the
business.
15. The role or duties of the board of directors of public companies has become increasingly
important since the passing of legislation such as Sarbanes-Oxley in the United States
and the Canadian Securities Administrators Multi-Lateral Instruments. Which of the
following is NOT a role of the board of directors?
a) Overseeing the company’s direction, strategy, and business approaches.
b) Aligning key executive and board remuneration with shorter-term interests of the
company and its shareholders.
c) Evaluating the calibre of senior executives’ strategy-making and strategy-executing
skills.
d) Monitoring the effectiveness of the company’s governance practices.
e) Ensuring the integrity of the corporation’s accounting and financial reporting systems.
16. John works for a small company and is responsible for making disbursements by cheque
and also to reconcile the monthly bank statements. Which of the following best describes
the control impact of this arrangement?
a) This arrangement improves the companies control over the cash account.
b) John is in a position to make and conceal unauthorized payments.
c) John is able to make unauthorized adjustments to the cash account.
d) Internal control is enhanced because John has two opportunities to discover
inappropriate disbursements.
e) There is no negative impact since this is best practice for small companies.
17. The internal auditors of an organization should
a) identify areas of risk that need to be addressed in the control systems.
b) continuously monitor and maintain the control systems.
c) appoint the external auditors.
d) both a) and b) above.
e) all of a), b) and c) above.
CMA Entrance Exam Questions and Answers 2023.
Strategic Management
1. (-) The main purpose of a company’s mission statement is to provide a context and
direction for
a) legislative lobby groups.
b) product/market/technology areas.
c) inside claimants of the company.
d) outside claimants of the company.
e) strategy formulation.
2. Continuous strategy evaluation is important for companies today because
a) international markets are fluctuating.
b) product development life cycles are shorter.
c) foreign competition is strong.
d) both a) and b) above.
e) all of a), b) and c) above.
3. (-) A diversification strategy focuses on
a) existing customers and existing products and services.
b) existing customers and new products and services.
c) new customers and existing products and services.
d) new customers and new products and services.
e) none of the above.
4. Which of the following statements about barriers to entry is FALSE?
a) It determines the extent of the threat of new entrants to existing competitors.
b) It typically includes economies of scale, product differentiation, and capital costs.
c) It cannot be created by government policy.
d) Customer loyalty is typically not a factor in creating a barrier to entry.
e) Both c) and d) above.
5. Which of the following best describes the concept of a distinctive competence?
a) The technical know-how that a company uses to create leading edge product
features.
b) Something a company does very well relative to competitors.
c) A primary activity that the company uses to create value for customers.
d) The ability of a company to perform an activity consistently well and at an acceptable
cost.
e) Something a company does well relative to other internal activities.
1
,6. In completing a SWOT (strengths, weaknesses, opportunities, threats) analysis, which of
the following is NOT an example of an external threat?
a) Growing bargaining power of the company’s suppliers.
b) Weakening brand image in relation to competitors.
c) Shifting of buyer preferences to a competing industry.
d) Election of a new federal government.
e) Higher than expected inflation rate.
7. In which of the following situations would a joint venture strategy be LEAST useful?
a) The available opportunity is very complex and risky.
b) Broader knowledge and skills are needed in a new industry.
c) The supply chain is short and established.
d) It is difficult to gain access into a foreign market.
e) Two relatively small companies are having difficulty competing with a large company.
8. Research in the widget industry has revealed that:
i) there are many manufacturers where the smaller manufacturers compete on
product differentiation and high quality, whereas the larger companies compete
on price and availability;
ii) the raw materials required for this industry are plentiful and provided by many
suppliers;
iii) the manufacturing process is highly labour intensive, mainly consisting of low-
skilled labour.
Based on these findings, what can be concluded about the widget industry?
a) Entry barriers in this industry are high.
b) Consumer bargaining power is high.
c) Supplier bargaining power is low.
d) Rivalry among competing suppliers in this industry is low.
e) Consumers place more value on product quality than price in this industry.
9. A company that currently competes in a single industry is seeking to reduce its
dependency on that industry by expanding into other industries. This company is using a
a) forward integration strategy.
b) diversification strategy.
c) horizontal integration strategy.
d) differentiation strategy.
e) backward integration strategy.
,3
10. Which of the following statements about the implementation of balanced scorecard in an
organization is correct?
a) The scorecard should include only four performance perspectives, including learning
and growth, internal business process, customers and financial.
b) Performance perspectives and indicators included in an organization’s corporate
scorecard, divisional scorecard and individual employee scorecard should be
identical.
c) Performance perspectives and indicators of critical success factors should be driven
by the organization’s mission, vision, and strategy.
d) The scorecard should include a balanced set of financial, quantitative, objective, and
lagging indicators.
e) The cause-and-effect relationship among the different performance perspectives
must be precise and tested.
Risk Management and Governance
11. When internal controls are implemented in an organization, there is often resistance
from individuals. One way to minimize resistance to internal controls is to
a) have an open forum for employees to suggest implementation methods.
b) ensure support from ownership and the Board of Directors.
c) assign the task of implementing the controls to an impartial staff person who has no
direct relationship or authority over the affected individuals.
d) both a) and b) above.
e) both b) and c) above.
12. Which of the following is NOT a typical role of an audit committee?
a) Decide which public accounting firm to retain.
b) Resolve conflicts between the public accounting firm and management.
c) Discuss and review findings of internal audits.
d) Delegate audit responsibilities to senior management.
e) Determine the scope of services of the public accounting firm.
13. The main purpose of an internal control system within an organization is to
a) provide timely and relevant information to the organization about its goals and
objectives.
b) safeguard the assets within the organization.
c) confirm the reliability and integrity of information within the organization.
d) ensure efficient use of resources.
e) ensure the behaviour of employees are consistent with organizational objectives and
strategies.
3
, 14. Effective internal control in a small company that has an insufficient number of
employees to permit proper division of responsibilities can best be enhanced by
a) employment of temporary personnel to aid the separation of duties.
b) the continuous review of all aspects of the business by the owner of the business,
including the output of the accounting system.
c) engaging an outside accountant to perform the monthly accounting duties.
d) delegation of a full, clear-cut responsibility to each employee for the functions
assigned to each.
e) ensuring that the accounting function takes precedence over all other functions in the
business.
15. The role or duties of the board of directors of public companies has become increasingly
important since the passing of legislation such as Sarbanes-Oxley in the United States
and the Canadian Securities Administrators Multi-Lateral Instruments. Which of the
following is NOT a role of the board of directors?
a) Overseeing the company’s direction, strategy, and business approaches.
b) Aligning key executive and board remuneration with shorter-term interests of the
company and its shareholders.
c) Evaluating the calibre of senior executives’ strategy-making and strategy-executing
skills.
d) Monitoring the effectiveness of the company’s governance practices.
e) Ensuring the integrity of the corporation’s accounting and financial reporting systems.
16. John works for a small company and is responsible for making disbursements by cheque
and also to reconcile the monthly bank statements. Which of the following best describes
the control impact of this arrangement?
a) This arrangement improves the companies control over the cash account.
b) John is in a position to make and conceal unauthorized payments.
c) John is able to make unauthorized adjustments to the cash account.
d) Internal control is enhanced because John has two opportunities to discover
inappropriate disbursements.
e) There is no negative impact since this is best practice for small companies.
17. The internal auditors of an organization should
a) identify areas of risk that need to be addressed in the control systems.
b) continuously monitor and maintain the control systems.
c) appoint the external auditors.
d) both a) and b) above.
e) all of a), b) and c) above.
