___________________________________________________________________
Certified Management Accountant
(CMA) Examination Practice Exam 2026
| 100 Questions & Answers with
Detailed Rationales | Complete CMA
Exam Prep & Study Guide
___________________________________________________________________
1. Which financial statement reports a company's financial position at a
specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Answer: Balance sheet
Rationale: The balance sheet reports assets, liabilities, and equity as of a specific
date, providing a snapshot of financial position.
2. Which inventory costing method generally assigns the oldest costs to cost
of goods sold first?
A. LIFO
B. FIFO
C. Weighted-average
D. Specific identification
,Answer: FIFO
Rationale: FIFO assumes that the first inventory costs incurred are the first costs
assigned to goods sold.
3. Under accrual accounting, revenue is generally recognized when:
A. Cash is collected
B. The customer places an order
C. The performance obligation is satisfied
D. An invoice is printed
Answer: The performance obligation is satisfied
Rationale: Accrual accounting recognizes revenue when it is earned, generally
when the applicable performance obligation has been satisfied, rather than
when cash is received.
4. Which budgeting approach requires managers to justify all expenditures
rather than simply adjusting the prior year's budget?
A. Incremental budgeting
B. Flexible budgeting
C. Zero-based budgeting
D. Continuous budgeting
Answer: Zero-based budgeting
Rationale: Zero-based budgeting starts from a zero base and requires activities
and expenditures to be justified rather than automatically carried forward.
5. A flexible budget is primarily designed to:
A. Eliminate fixed costs
B. Adjust budgeted amounts for actual activity levels
C. Replace the strategic plan
D. Estimate only cash expenses
,Answer: Adjust budgeted amounts for actual activity levels
Rationale: Flexible budgets recalculate expected revenues and variable costs
based on the actual level of activity, improving performance evaluation.
6. A company expects sales of 10,000 units at $40 each. Variable cost is $25
per unit and fixed costs are $90,000. What is the expected operating
income?
A. $50,000
B. $60,000
C. $150,000
D. $310,000
Answer: $60,000
Rationale: Contribution margin is $15 per unit. Total contribution margin is
$150,000, and subtracting $90,000 of fixed costs gives $60,000 operating
income.
7. Which forecasting technique gives greater weight to more recent
observations?
A. Simple average
B. Exponential smoothing
C. Historical trend only
D. Static budgeting
Answer: Exponential smoothing
Rationale: Exponential smoothing assigns different weights to observations,
with greater emphasis typically placed on recent data.
8. In regression analysis, the dependent variable is:
A. The variable being predicted
B. Always a fixed cost
, C. The independent input
D. The regression coefficient
Answer: The variable being predicted
Rationale: The dependent variable is the outcome being explained or forecast
using one or more independent variables.
9. A budget prepared for several possible levels of activity is called a:
A. Static budget
B. Flexible budget
C. Capital budget
D. Master budget
Answer: Flexible budget
Rationale: A flexible budget allows budgeted revenues and costs to be adjusted
for different activity levels.
10.Which budget normally serves as the foundation for many other operating
budgets?
A. Sales budget
B. Cash budget
C. Capital expenditures budget
D. Financing budget
Answer: Sales budget
Rationale: Expected sales frequently drive production, purchasing, staffing, and
other operating budgets.
11.A company has actual material cost of $52,000 and a flexible-budget
material cost of $50,000. The variance is:
A. $2,000 favorable
B. $2,000 unfavorable
Certified Management Accountant
(CMA) Examination Practice Exam 2026
| 100 Questions & Answers with
Detailed Rationales | Complete CMA
Exam Prep & Study Guide
___________________________________________________________________
1. Which financial statement reports a company's financial position at a
specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Answer: Balance sheet
Rationale: The balance sheet reports assets, liabilities, and equity as of a specific
date, providing a snapshot of financial position.
2. Which inventory costing method generally assigns the oldest costs to cost
of goods sold first?
A. LIFO
B. FIFO
C. Weighted-average
D. Specific identification
,Answer: FIFO
Rationale: FIFO assumes that the first inventory costs incurred are the first costs
assigned to goods sold.
3. Under accrual accounting, revenue is generally recognized when:
A. Cash is collected
B. The customer places an order
C. The performance obligation is satisfied
D. An invoice is printed
Answer: The performance obligation is satisfied
Rationale: Accrual accounting recognizes revenue when it is earned, generally
when the applicable performance obligation has been satisfied, rather than
when cash is received.
4. Which budgeting approach requires managers to justify all expenditures
rather than simply adjusting the prior year's budget?
A. Incremental budgeting
B. Flexible budgeting
C. Zero-based budgeting
D. Continuous budgeting
Answer: Zero-based budgeting
Rationale: Zero-based budgeting starts from a zero base and requires activities
and expenditures to be justified rather than automatically carried forward.
5. A flexible budget is primarily designed to:
A. Eliminate fixed costs
B. Adjust budgeted amounts for actual activity levels
C. Replace the strategic plan
D. Estimate only cash expenses
,Answer: Adjust budgeted amounts for actual activity levels
Rationale: Flexible budgets recalculate expected revenues and variable costs
based on the actual level of activity, improving performance evaluation.
6. A company expects sales of 10,000 units at $40 each. Variable cost is $25
per unit and fixed costs are $90,000. What is the expected operating
income?
A. $50,000
B. $60,000
C. $150,000
D. $310,000
Answer: $60,000
Rationale: Contribution margin is $15 per unit. Total contribution margin is
$150,000, and subtracting $90,000 of fixed costs gives $60,000 operating
income.
7. Which forecasting technique gives greater weight to more recent
observations?
A. Simple average
B. Exponential smoothing
C. Historical trend only
D. Static budgeting
Answer: Exponential smoothing
Rationale: Exponential smoothing assigns different weights to observations,
with greater emphasis typically placed on recent data.
8. In regression analysis, the dependent variable is:
A. The variable being predicted
B. Always a fixed cost
, C. The independent input
D. The regression coefficient
Answer: The variable being predicted
Rationale: The dependent variable is the outcome being explained or forecast
using one or more independent variables.
9. A budget prepared for several possible levels of activity is called a:
A. Static budget
B. Flexible budget
C. Capital budget
D. Master budget
Answer: Flexible budget
Rationale: A flexible budget allows budgeted revenues and costs to be adjusted
for different activity levels.
10.Which budget normally serves as the foundation for many other operating
budgets?
A. Sales budget
B. Cash budget
C. Capital expenditures budget
D. Financing budget
Answer: Sales budget
Rationale: Expected sales frequently drive production, purchasing, staffing, and
other operating budgets.
11.A company has actual material cost of $52,000 and a flexible-budget
material cost of $50,000. The variance is:
A. $2,000 favorable
B. $2,000 unfavorable
