CERTIFIED MANAGEMENT
ACCOUNTANT (CMA) EXAMINATION
QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2026 Q&A | INSTANT DOWNLOAD PDF
1. The primary objective of managerial accounting is to
A. Provide information for external users
B. Ensure compliance with GAAP
C. Provide information for internal decision making
D. Prepare audited financial statements
Rationale: Managerial accounting supports internal planning, controlling, and
decision-making, not external reporting.
2. Which of the following is a period cost?
A. Direct materials
B. Direct labor
C. Manufacturing overhead
D. Selling expense
Rationale: Selling and administrative expenses are period costs not attached to
production.
3. Contribution margin equals
A. Sales – fixed costs
B. Sales – variable costs
C. Sales – operating income
D. Sales – cost of goods sold
,Rationale: Contribution margin measures revenue remaining after variable
costs.
4. Which budgeting approach starts from zero each period?
A. Rolling budget
B. Static budget
C. Zero-based budgeting
D. Master budget
Rationale: ZBB requires justifying all expenses from a zero base each cycle.
5. The breakeven point increases when
A. Sales price increases
B. Variable costs decrease
C. Fixed costs increase
D. Contribution margin increases
Rationale: Higher fixed costs require more units to cover total expenses.
6. Which costing method assigns both variable and fixed manufacturing costs to
products?
A. Variable costing
B. Absorption costing
C. Direct costing
D. Marginal costing
Rationale: Absorption costing includes all manufacturing costs—both variable
and fixed—in product costs.
7. A company’s current ratio is 2.0 and quick ratio is 1.0. This indicates:
A. The company has no inventory
B. Inventory is low
C. Inventory is significant relative to current assets
D. The company has no receivables
Rationale: Quick ratio excludes inventory; a much lower quick ratio than current
ratio shows inventory makes up a large portion of current assets.
, 8. Standard costing is primarily used for:
A. External reporting
B. Tax compliance
C. Performance evaluation and cost control
D. Budget preparation only
Rationale: Standard costing helps measure variances between actual and
expected costs for control purposes.
9. In a flexible budget, costs are:
A. Always fixed
B. Adjusted for actual activity levels
C. Ignored
D. Set at historical amounts
Rationale: Flexible budgets adjust costs based on actual output to provide
relevant variance analysis.
10. A key assumption of activity-based costing (ABC) is:
A. All costs are fixed
B. Overhead is uniform across products
C. Products consume activities differently
D. Direct costs are irrelevant
Rationale: ABC assigns overhead based on actual activity usage, not arbitrary
allocation.
11. Which ratio measures profitability relative to sales?
A. Current ratio
B. Debt-to-equity ratio
C. Net profit margin
D. Inventory turnover
Rationale: Net profit margin shows how much profit is generated per dollar of
sales.
ACCOUNTANT (CMA) EXAMINATION
QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2026 Q&A | INSTANT DOWNLOAD PDF
1. The primary objective of managerial accounting is to
A. Provide information for external users
B. Ensure compliance with GAAP
C. Provide information for internal decision making
D. Prepare audited financial statements
Rationale: Managerial accounting supports internal planning, controlling, and
decision-making, not external reporting.
2. Which of the following is a period cost?
A. Direct materials
B. Direct labor
C. Manufacturing overhead
D. Selling expense
Rationale: Selling and administrative expenses are period costs not attached to
production.
3. Contribution margin equals
A. Sales – fixed costs
B. Sales – variable costs
C. Sales – operating income
D. Sales – cost of goods sold
,Rationale: Contribution margin measures revenue remaining after variable
costs.
4. Which budgeting approach starts from zero each period?
A. Rolling budget
B. Static budget
C. Zero-based budgeting
D. Master budget
Rationale: ZBB requires justifying all expenses from a zero base each cycle.
5. The breakeven point increases when
A. Sales price increases
B. Variable costs decrease
C. Fixed costs increase
D. Contribution margin increases
Rationale: Higher fixed costs require more units to cover total expenses.
6. Which costing method assigns both variable and fixed manufacturing costs to
products?
A. Variable costing
B. Absorption costing
C. Direct costing
D. Marginal costing
Rationale: Absorption costing includes all manufacturing costs—both variable
and fixed—in product costs.
7. A company’s current ratio is 2.0 and quick ratio is 1.0. This indicates:
A. The company has no inventory
B. Inventory is low
C. Inventory is significant relative to current assets
D. The company has no receivables
Rationale: Quick ratio excludes inventory; a much lower quick ratio than current
ratio shows inventory makes up a large portion of current assets.
, 8. Standard costing is primarily used for:
A. External reporting
B. Tax compliance
C. Performance evaluation and cost control
D. Budget preparation only
Rationale: Standard costing helps measure variances between actual and
expected costs for control purposes.
9. In a flexible budget, costs are:
A. Always fixed
B. Adjusted for actual activity levels
C. Ignored
D. Set at historical amounts
Rationale: Flexible budgets adjust costs based on actual output to provide
relevant variance analysis.
10. A key assumption of activity-based costing (ABC) is:
A. All costs are fixed
B. Overhead is uniform across products
C. Products consume activities differently
D. Direct costs are irrelevant
Rationale: ABC assigns overhead based on actual activity usage, not arbitrary
allocation.
11. Which ratio measures profitability relative to sales?
A. Current ratio
B. Debt-to-equity ratio
C. Net profit margin
D. Inventory turnover
Rationale: Net profit margin shows how much profit is generated per dollar of
sales.
