CERTIFIED MANAGEMENT
ACCOUNTANT EXAMINATION (CMA)
QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2026 Q&A | INSTANT DOWNLOAD PDF
1. What is the primary objective of management accounting?
A. External reporting
B. Tax compliance
C. Providing information for internal decision-making
D. Auditing financial statements
Rationale: Management accounting focuses on providing relevant
financial and non-financial information to managers for planning,
controlling, and decision-making.
2. Which cost remains constant per unit but changes in total with activity
level?
A. Fixed cost
B. Variable cost
C. Mixed cost
D. Sunk cost
Rationale: Variable costs change in total proportionally with activity,
while per unit cost remains constant.
3. Break-even point occurs when:
A. Revenue exceeds costs
B. Costs exceed revenue
C. Total revenue equals total costs
, D. Profit is maximized
Rationale: Break-even is the point where there is no profit or loss.
4. Which budget is prepared first in the budgeting process?
A. Cash budget
B. Production budget
C. Sales budget
D. Capital budget
Rationale: The sales budget drives all other budgets in the master budget.
5. A flexible budget:
A. Is static
B. Ignores activity levels
C. Adjusts for changes in activity levels
D. Is used only for capital planning
Rationale: Flexible budgets vary with actual output levels.
6. Direct material variance is caused by:
A. Labor efficiency
B. Overhead allocation
C. Price or usage differences in materials
D. Selling price changes
Rationale: Material variance arises from price paid or quantity used.
7. Standard costing is mainly used for:
A. External reporting
B. Tax planning
C. Cost control and performance evaluation
D. Dividend decisions
Rationale: Standard costing helps compare actual vs expected costs.
8. Contribution margin is:
A. Sales – fixed costs
B. Net profit
C. Sales – variable costs
, D. Gross profit
Rationale: It measures how much contributes to fixed costs and profit.
9. Which inventory method assumes oldest goods are sold first?
A. FIFO
B. LIFO
C. Weighted average
D. FIFO
Rationale: FIFO assumes first-in, first-out flow of inventory.
10.Responsibility accounting is based on:
A. Geography
B. Products
C. Organizational responsibility centers
D. Marketing channels
Rationale: It assigns accountability to managers for specific areas.
11.A sunk cost is:
A. Future cost
B. Avoidable cost
C. Past cost that cannot be recovered
D. Incremental cost
Rationale: Sunk costs are irrelevant for future decisions.
12.Which is NOT part of relevant costing?
A. Future costs
B. Incremental costs
C. Avoidable costs
D. Sunk costs
Rationale: Sunk costs are not relevant in decision-making.
13.Operating leverage measures:
A. Financial risk
B. Tax impact
C. Sensitivity of profit to sales changes
ACCOUNTANT EXAMINATION (CMA)
QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2026 Q&A | INSTANT DOWNLOAD PDF
1. What is the primary objective of management accounting?
A. External reporting
B. Tax compliance
C. Providing information for internal decision-making
D. Auditing financial statements
Rationale: Management accounting focuses on providing relevant
financial and non-financial information to managers for planning,
controlling, and decision-making.
2. Which cost remains constant per unit but changes in total with activity
level?
A. Fixed cost
B. Variable cost
C. Mixed cost
D. Sunk cost
Rationale: Variable costs change in total proportionally with activity,
while per unit cost remains constant.
3. Break-even point occurs when:
A. Revenue exceeds costs
B. Costs exceed revenue
C. Total revenue equals total costs
, D. Profit is maximized
Rationale: Break-even is the point where there is no profit or loss.
4. Which budget is prepared first in the budgeting process?
A. Cash budget
B. Production budget
C. Sales budget
D. Capital budget
Rationale: The sales budget drives all other budgets in the master budget.
5. A flexible budget:
A. Is static
B. Ignores activity levels
C. Adjusts for changes in activity levels
D. Is used only for capital planning
Rationale: Flexible budgets vary with actual output levels.
6. Direct material variance is caused by:
A. Labor efficiency
B. Overhead allocation
C. Price or usage differences in materials
D. Selling price changes
Rationale: Material variance arises from price paid or quantity used.
7. Standard costing is mainly used for:
A. External reporting
B. Tax planning
C. Cost control and performance evaluation
D. Dividend decisions
Rationale: Standard costing helps compare actual vs expected costs.
8. Contribution margin is:
A. Sales – fixed costs
B. Net profit
C. Sales – variable costs
, D. Gross profit
Rationale: It measures how much contributes to fixed costs and profit.
9. Which inventory method assumes oldest goods are sold first?
A. FIFO
B. LIFO
C. Weighted average
D. FIFO
Rationale: FIFO assumes first-in, first-out flow of inventory.
10.Responsibility accounting is based on:
A. Geography
B. Products
C. Organizational responsibility centers
D. Marketing channels
Rationale: It assigns accountability to managers for specific areas.
11.A sunk cost is:
A. Future cost
B. Avoidable cost
C. Past cost that cannot be recovered
D. Incremental cost
Rationale: Sunk costs are irrelevant for future decisions.
12.Which is NOT part of relevant costing?
A. Future costs
B. Incremental costs
C. Avoidable costs
D. Sunk costs
Rationale: Sunk costs are not relevant in decision-making.
13.Operating leverage measures:
A. Financial risk
B. Tax impact
C. Sensitivity of profit to sales changes
