2021 Edition - Practice Questions Reference: Wiley CMAexcel Learning System FINANCIAL PLANNING, PERFORMANCE, & ANALYTICSee eee = PART-1: FINANCIAL PLANNING, PERFORMANCE, Fa & ANALYTICS TABLE OF CONTENTS Section A: External Financial Reporting Decisions opie Financial Statements Topic2 Recognition, Measurement, Vluation, and Disclosure Section B: Planning, Budgeting & Forecasting Tople1 Strategic Planning Topic 2 Budgeting Concepts Topic 3 Forecasting Techniques BRM topics Budgeting Methodologies Topic Annual Profit Pian and Supporting Schedules Topic Top Level Panning & Analysis cisy Section C: Performance Management Topic2 Responsibility Centers & Reporting Segments Topic3 Reporting of © al Segments FEM Section D: Cost Management Topic 1 Measurement Concepts Topic 2 sting Systems | ople 3 ead Costs 7 Topic 4 Chain Management FP tonics Business Process Improvement | = Section E: Internal Controls Tople1 Governance, Risk, and Compliance emg Toric2 Systems Controls and Security Measures Section F: Technology & Analytics BEBE pict Information Systems Ae Technology-Enabled Finance Transformator Topic Data AnalyteMiles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1 Section A Section A External Financing Reporting Decisions A.1) Financial Statements A.2) Recognition, Measurement, Valuation, and Disclosure Bed 2 ea asl 3 = eS = es a3 eS La = a5 = = = E=a = ess =Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Pat 1, Section A Topic Questions A.1) Financial Statements 1. An accountant preparing the statement of ath flows using the ndrat method. She fund onthe balance sheet that the prior yea’ balance of equipment vas $295,700 and the current year's balance on equipment 1s $308,000, Depreciation expense during the current year was $22,400. During the yer, the company sold ‘uipment for $4000, resulting In a gain of $23,600 On the statement of cash ows, whats the cash ‘outflow for the purehae of equlpment his year? . $49,200 $52300 4. §70,700 2. Which one ofthe following would not be classified as current lle? ‘Security deposits reeled from renters fo a one-year lease bi. Rent forthe current year recelved on January 2f the current yar &Undetrbed stock lividends 4. Ten-year bonds sold 110 months ago 5. Acompany received an nlc in anuary forthe electicy used by its warehouse in December, and it recorded the expense in January. The company uses the acral basis of accounting. Whats the impact to the company's December financial statements? ‘Current abies were understated, and retained earnings were overstated 1b. Operating expenses were overstated, and retained earings wore overstated ._Cashand cash equlalents wee overstate, and retained earnings were understated 4. Accrued expenses were overstated, and retained earings were understate. Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part, Section A ‘A.2) Recognition, Measurement, Valuation, and Disclosure sty Amusement Park recent installed anew til ri. Although thie traction has an average life of {40 years, Majesty estimates thatthe ide willbe popular for 1S years, t which point it wil be disassembled and replaced witha ferent ride, Park ttendanc is based onthe local economy, which witha fren ‘ie, Park attendance is based on the local economy, which dificult pred: The method Majesty should use to depreciate tis rides 2 dediningbalance straight line with a 1-yea ife 4. units of output 2. The purpose ofinterpriod income tax allocation ist 2. reconcile the tax consequences of permanent and temporary ferences that appear onthe company’s recognize tax asset or ality forthe tax consequences of temporary ferences tht exist at ads the income tax expense onthe Income statement tobe consistent withthe income tax Habit 4. provide proper disclosure ofa dstibuton of earnings to a taxing authority 2. Which one ofthe folowing statements correctly describes the accounting testment of research and development cost (RAD) under U.S. GAAP and IFRS? ‘Goth U.S. GAAP and IFRS allow for cost of RAD tbe capitalized Nelther US, GAAP nr IFRS allow for costs of RAD to be captaled xpensed expensed but allows for b. €.US.GAAPallows forthe captalzation of the costs of RAD, and IFRS requve RED cass to 4. US. GAAP requres R&D to be expensed and IFRS requires research cost to the capitazaton of developerMiles CMA Review -Practice Questions from Wiley CMAexcel Learning System Part 1, Section A Multiple Choice Questions 1. Theincome statement fo Harrington Teehnoogls Ie: Ne Sales $2,00,000 Lass Cost of Goods Sld 200,000 Gross Profit 710,000 tess: Transportation nd Travel 45,000 Depreciation 58,000 operating income 376,000 come before Totes 300,000 Tax Expense @30% 270,900 Netincome 320.000 “en Hamiton analyzed the companys anda statement and concluded that the real nt income should te 383,200 instead of $630,000, Which of the following arguments Is most Maly fo suppor his conclusion? 2. $53,200 due fom a cient was writen of as recoverable after the finalization of accounts for the furtent peri by, She company valued ts lnventor using the specie Kentifetin method, whereas the financial analyst Used the LIFO method fr te current period ‘he company right have liquidated is UFO reserve. 44 ‘The company has included expenses in elation to dlcontnued operations as part of come from 2. Thecurent alo for Garret cfr the previous five years: Yeah Voor? Years. Year@ Year hich ofthe following factor ie the most Healy reason forthe low current rato Year 4? 1 Materials were purchased anced in year for which payment i due B.Lone:term debts were due fr repayment in Year 4 ‘The company reduced its creait period in Year 4 44 Working Cpt in Year & decreased de tan Increase in accounts payable 4 Thecath flows and netncome from four business segments for Tylor Laboratories nc. have been Segment Segment 2 Sogment3.__ Segment 4 (ath Flow fom Operations $3000 $250) S3000)—_*$2,.000 ‘Gash ow rom investing sctites (4000) 6008000000) (ash Flow from nancing acts "0s0 (1.000) ——(,000) 1,080 Netincome 150017502375, 11500 ase on the information, which segment should be discontinue bythe company? Segment 3, because cash used in operations ie high and cash inflow is predominant from investing Segment 1, Because net income i lowest and requires high investments .Sepment, beeuse net income and czh flow from operations ae low. 44. Segment 2 because cash used n operations ow and ash flow from investing acts ls not propery DODGED IEE TIE Miles OMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1, Section A ‘4. Te cath lw from operations fr Charlene Eneray Inc Ia $25,000 for the curent year fhe amortization ‘expense increases by $5,000 and other factors remain same, under which ofthe fllowing assumption wil the cash flow from operations remain unafected? '3Achange in amortization method wil not havea retrospective effet. Bb. The company hasan init le ‘The company i operating ina taefee environment 4. The company can change the depreciation method in between a financial ye 5. The following information I extracted fromthe latest franca information of Hines Matera In. Taxate 30% Netincome $15,000 azh Flow from Operations 545,000 Adana information 1 Thetaxratefor the next years expected to Increase by 2% 2. The company i planning to purchase equipment worth $50,000 Inthe fst quarter of next year, 3, A9% increase In capacty is expected with the use of new equipment. ‘Consisting the given factors wich ofthe following would be andeal strategy to decrease the taxlabity for thee year? ‘Defer the purchase of equipment to nest year to take advantage of tls cary forward B. Deprecate the azet uring the double-decning balance method to show higher ash flows from operations in intial years. Prepare the cash flow statement using the ect method to show low 4. Defer the purchase of equipment nex cash from operations and lower year ifs deferred tax abit canbe esconabh 6. Thefinancil accountant of Eve Wolfe Cor, has ascertained the cash flows fom operation s follows: Netineome $15,000 Depreciation on equipment 2 Dividend income 2500 Increase in current assets 3,000 Increase in current abies 500 Cash Flow fom Operations sas.o00 “The compan/s management accountant argues that the cash low from operations should be $8,500. Which of the following statements, true will support the management accountant’ calculation? 2. The company operates in a tactves environment 1. The company ures FR to aicertain cash flow from operation. Cashflow from operations is acertained using the dect method. 4. Depreciation on equipment should not be added back to nat ncome for calculating cash fw from } AS.‘Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part, Section A 1. The management of Arthur Energy recognized a contingent laity of $50,000 inthe current year. However, before the annvalrepoct was sued, the company resolved the sue, making lump-sum payment of $82,000. The board of directors has decided t incorporate the transaction nthe subsequent year’ ancl Statements, Which ofthe following grousions of US GAAP, Hf aplcble, i kel to prove the managements decison wrong? 2 Los contingencies mort be recognized when tis bath probable that los has been acute and the amount ofthe sss reasonably estimable b. Whenever GAA? or industry specific regulations allow a choice between two ot more accounting methods, the method selected shouldbe dose, eHfan event alters the estimates used in preparing the financial statements, then the nancial statements should be ase 4. Ifan event provides atonal evidence about conditions that existed ae ofthe balance shest date and alters the estimates ue, then the nancial statements should be adjusted 8 Shelton Devin Corp. wns a 30% intrest n each of ts two subsidies. The EO of the company i notin ‘aver of presenting consolidated financial statement. 6ased onthe information, which of te folowing is most ily tue? 2 The decton ofthe CEO correct because companies are required to lrue consolidated statements only when the ownership exceeds 50%. b.Thedecsion ofthe CEOs wrong because companls are required to issue consolidated statements when th ownership exceeds 208 ‘The decison ofthe CEO is wrong because companies ae required to sue consolidated statements only ifacompany holds more tha ten subsidiaries 44. The decison ofthe CEO i correct because companies ae required to sue consolidated statements when company has tines of more subsidiaries 9. Cite Enterprises hae $150,000 in accounts receivable atthe endof Year estimates its bd debts tobe Sof the receivables, 50 the accountant reports $7,500 as bad debts andthe net ealzable value 38 '142,500, Under which ofthe following crcumtanes wil the amount of bad debts reported mostly reduce? {fhe company shortens the erat period allowed ‘tf he company lengthens the credit period allowed fhe allowance for doubtful accounts has a ced balance of $1,500. 4. tf the allowance for doubtful account has a debit balance of $1,500. 10, The nancial statements of Dulane Properties show 140000 outstanding shares, par value $10. The current market val 1 $25 er share, A the beginning ofthis year, the company reacqured 10,000 shares at $8 per Share. The company uses the cost method of secounting for easury stock. The cuentas books of ‘ccount show the value of outstanding shares a fellows ‘Common stock, $10 par $1,400,000 Less: Treasury Stock 300,000 Net Common Stock, $10 par $3,300,000 The company's C0 did nt approve the franca statements. The most kay reason for CFO's disapproval s 1. Thetreasurystock'sincoret} valued based on par vale, instead of valuing a the acquetion price. 1. The eestury stocks incorecthvlued based on par vale, instead of valuing at the cutent market ae, The paral ofthe treasury stock should be presented ae deduction from pr value of sued shares ofthe same class The treasury stock shouldbe reported as an asset a6 POPE ITE Ie or CMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1, Section A 11. Rogers Electronics is planning to make a marke inthe companys stock. The company's CFO suggests the eacquistion of shares. Which ofthe folowing is mort kely to happen if the CFO's suggestion Implemented? 1. The iso takeovers by competitors wil increase 1b. Thiswill hinder exercise of employee stock options The stock pric wil nerease. 44. Thiscould serve asa ination ofthe companys negative outlook abou ts future performance 12. Cavin Software has invested in 35% ofthe voting stock of flotech Corp. The CFO suggest searing more stockof Botech. Based onthe Information, which ofthe folowing willbe tue? {Additional acquisions beyond 15% wl require Calin oftware to issue consolidated franca 1b. Gavin's total value wil decrease as incidental costs of acqision must be subtracted when hogs cerceed 35%, ‘© The crcumstances leasing tothe declson to acquire adtonal shares shal be dsclosed nthe notes to ‘the financial statement 44. Any addtional acqiston of assets up to 20% shouldbe classified as held to maturity 133. Warmer Machines missed recording purchases worth $10,000 nthe curent years income statement. While Snaliing the financial statements, the companys accountant detected the etor and partly corrected Under which of the flowing stuations wlthe company repr. lower than actual net income? 2 Ifthe accountant as reduced cash by $10,000, Bb ifthe accountant has added the missing purchates worth ony $10,000 othe cost of goods ol «. the accountant has increased accounts payable ony by $10,000, 4. ifthe accountant has reduced inventory by $20,000, 14, Sandra Bllucl i anaizng inventory of companls from four diferent Industries consume: goods, sports 00d manufacturers, electronics and alrraft manufacturers. Assuming the inventory valuation methods feflectthe actual fow of ventory and the inventory includes finished goods, which ofthe following, Industries will most ely have 2e0 UFO reserve? 2. Consumer Goods 1. Sports Goods Manufactures Electronie 4. Aircraft Manutacturers 415, An entity has determined that a performance obligation within a contract satisfied overtime becouse the transfer of contol ofthe goods tothe customer fe sated over ime. Which ofthe follwing ian allowed ‘method to measure an enty’s progress toward compete satisfaction ofthe peformanceabigation? 2 nsaliment input method b. Output method Gost recovery method 4. Through-put method aRRR RR ne eee eee ee ee ne rene eeee ener eee Miles CMA Review - Practice Questions fom Wiley CMAexcel Learning System Pat 1, Section A Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part, Section A Essays Question 1A-ES01 Is almost midnight on December 320% and the Book keeping program at Crnk-M-Up, Ines malfunctioning, nstesd of producing an income statement, it keeps printing an alphabetical st of account. Pittittt ‘Administrative expenses $215,000 Cost of goods sold 403,500 Income tones 54900 Loss on inventory write-down (nonrecurring) 13,000 ‘ain on foreign cerency transition 9500 Loss fom discontinued operations 30,000 sales 945,000 Sling expences 145,00 Questions 'A. As the new accountant for Crank-M Up, your sob sto prepare the fms multpe-step income statement for 201 with EPS closure in accordance with GAAP, Crank-M-Up has 50000 shares of common fck outstanding and has a 30% federal income tax rate B. Mark M, Down the CEO of Crank-Mt-Up, is confused about the accounting treatment for iregulr ems on ryMiles MA Review - Practice Questions rm Wiley CMAexcl Learning System Part, Seton A rer} = = = = = == = [=| a =a Bes : = Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part, Section A Question 1A-ES02 re accountant at Dark Dare, ne. suddeny auton December 31, 2018 ebvng behind 2 mes. You managed to Find the following information: esa. Dope Baling ——=~=S*C«SOOD ‘cum, Depr-— Equipment 10.000 Accounts Receivable 2900 ‘Alowance for Bod Debt 340 Bonds Payable (ve 12/31/22) 73000 ulings 0400 cash 20000 Common stock 60,000 Equipment 4,000 ‘Questions [A. Prepare the fs classified balance sheet fr 2016. interest Payable wo Inventory 102,000 and 137320 Notes Payable (due 7/1/18) 14400 Prepaid Advertsing 5,000 Retained Earrings ? Salaries payable 00 aves payable 3000 t Fheny ark, the CEO of Dark Dae, is concerned about the types of closures thatthe im needs forts bolance sheet items Oizcuse the dlslosues that the firm nes sto make for: (J) Inventories (2) Accounts ecclabies (3) Property, lant and Equipment (4) Bonds Payable; and(5} Common Stock aaaMiles CMA Review -Practice Questions from Wiley CMAexcel Learning System Part 1, Section A aa PEGG Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1, Section A aaaStee eg ee Miles CMA Review - Practice Questions from wiley CMAexcel Learning System Pare, Section A Miles CMA Review - Practice Questions from Wiley CMAexcel Lesring System Part 1, Section A Question 1A-ES03 Information for Cash-W-Cary shown blow Coahen-Cary ‘Comparative Balance sheet "Arf December 33 as cash 2100 $120,000 135,00 105,000 Inventories 180,000 225,000 Lang:term investments 2 0,000 Total aces 396.500 ‘s10.000 Accounts payable $75,000 $120,000 Operating expense payable 24000 15,000 ‘Bonds payable 70,00 100,00 Common tock 125,000 125,000 Retained earrings sozsoo 150,000 Total ables and stoctholdrs’ equities $395,500 $510,000 Forthe year ended December 31,2018 ee $560,000 (Cost of goods sold 75000 Gross profit 185,000 Operating expences 180.000 Operating income 000 Loss on sae of investment (2.500) Netloss $2500) ‘ther Information Account payable relat tothe purchase of inventory $60,000 of ang-term investment: were col for $52,500 Cash divends of $45,000 were decared and pai in 2017, Questions [A Prepare the statement of cath lw using the indirect method, 1. Prepare the operating section of the statement of cath lows ung the direc method. © Buck Spender the CEO of Cai-N- Carry, confused about how to asl various types of cash ows, Explain tohimhich ash flows ae dassiied as operating investing and fancing eee ere Per ere rene awa os of‘Miles CMA Review - Practice Questions fram Wiley CMAekcel Learning System Part 1, Section A a6 DAHA eat [Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1 Section A Question 1A-ES04 (on January 4, 2028, ots Loot, Ine. purchased $500,000 of 8%, 5-year bonds for $520,790 for an effective Interest ate of 7% The bonds pay interest on July 3 and January , and Lotsa Loot uses the efective-nterest method to account for there avaliable forsale secures. — ~Present Value ofan Ordinary Annulty reid | ee [| | | x | | | ow | Im Ei "3850 | ose | os7i | O96 | a9s2 | 0949 | O35 | 0926 | Osi? | o909 z zoo | ase | sei | 1686 | aes | 20s | cane | ies [2759 | 1736 3 zsex | 2aee_| 2a2a | 2775 | 2.723 | 2073 | zene | 2577 | 258i | 2087 fa 3002 | 3808 | 3717 | 3620 | 3546 | 34s | 367 | 3312 | 3200 | 3170 5 aasa | aria | asao | 4asz | 4329 | «212 | aaoo | 3933 | 380 | 3701 € 5795 | Sea | Sai7 | Saaz | sore | aoi7 | aver | 4023 | anes | ass 7 ere | cara | 6230 | 6002 | 5706 | sea | S200 | 5.206 | sans | 868 = 7esa_| 7325 | Taro | 6739 | 6aes | @2i0 | Sori | S7a7 | 5535 | 5335 2 3566 | e162 | 7786 | 7435 | 7.208 | e807 | 6515 | 6247 | 5.995 | 5795 | 30 [sant [ase | asso | eant | 7.72 [7360 | 7008 [ e7i0 | eats | e105 | ‘Questions [A cord the journal entry for he purchase ofthe bonds Record the journal entry for he receipt of interest on Jl, 2018, Record the oural entry oscrue interest on December 31, 2018, '._ wt the entry to recognize the $530,00 fr value ofthe bonds on December 33, 2018 E.On anuary 3, 2019, Lotsa Lot received a cack or the intrest on the bonds. immediately after receiving the check, the frm sod the bonds fr $830,000 Wit the entries for these events Record the journal entries or the sale of AAA and the purchase of CC. {6 On December 3,2020, Lots Lots Trading porto of equity securities had the following values: ert vaae “To)o00 sores ef 6GB Corp. commonstock ——S16Z000 ——~=«HS, SOD 600 shares of CCC Corp common stock 27580 25500 uoasso $223,000 Record the flr vale adjusting entry on December 31, 2020, ruMiles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part , Section A Miles MA Review - Practice Questions from Wiley CMAexcel Learning System Part 1, Section A MH. On January 1, 2021, ots2-Lot purchased 325% interest in the common stack of Gabbled Up Company for $500,00. A that ime, Gobbled Up had 100,000 shares oft $1 par common tock sued and outstanding. Lotsa Lot has significant influence over Gobled Up, nd uses the equty method to acount fr tis _a,alabe-or- sale investment Record the journal entre forthe following events onthe books of Lots Loot: 1. Purchase of Gbbled Up common stock on January 1,202: 2. Gobbed Up Paid total $160,000 cath vided on Jay 1, 2023: 3. Netincome for Gbbled Up was $360,000 in 2021 ‘4 What isthe balance of Lota Loot’s investment in Gabed Up at the end of 2021 before any market '5. What would these entries Rave been Loss Loot had been a passive investor that didnot significant influence over Gobbled Up and used the cost method to account for this investment? 6. Gobble Up paid a $160,000 cash cvidend on July 12021 71 Netincome for Gbbled UP was $360,000 in 202 8. What would the balance of Lotsa Loo’ investment In Gobbled Up have ben atthe end of 2023 before any market ar vaue cstment? DOGDIDOT DIDO nas. ret)Miles OMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1, Section A Miles OMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1, Section A DQQDDTTTTI IIaMiles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1, Section A Question 1A-ES05, ‘on Januar 1, 2018, Equ-Tee, nc. was granted a charter that authorizes isuanceof 50,000 shares of 8%, $100, par vale, crmulative preferred stock and 150,00 shares of $5 par value common stock ‘uestions Jouralie the folowing transactions for 2018 {8 om anuary 2 the frm exchanged 8,00 shares of common stock for land valved at $300,000 On danvaty 3, the frm sued 12,000 shares of common stock tothe puble at $60 per share. The fm also issued 100 shoes of common tack its lawyer for costs associated with the formation ofthe fm. (On February 3, 2018, the frm sued 1,000 bundles of preferred and common stock for $720 each. Each bundle contained 10 shares of common stock and 3 share of 8X, $100 par value preferred stock. On that date, the common stock hada market value of $0 per share, but the preferred stock had no determinable market value 1. The firm had $200,000 in retained earings as of June 30, 2018, andthe market price of common stock was $60 per share, On that ay, the frm declared a 10% stock dvidend on common stock On dul 3, the irmissued the shares to fll he stock dividend Fm August, the frm pad $0,000 to reacquire 2,000 shares fits common stock fr treasury stock Eau “Tee uses the cost method to acount for treasury stock transactions. 1G. OnSeptember the rm declared a $20,000 total cash dvdend tobe paid to preferred and ‘common stocthoiders on September 30, “otal prefered stock dvidend = _ Dividend per share fr preferred stockholders = Total common stack dvdend=__ Dividend per hare for common stockholders Journal entry to record the decaraton ofthe dividend H. On september 30, the firm paid the ash dividend. (On October, the fr elesued the treasury stock at $58 per share. Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1 Section A[Miles CMA Review - Practice Questions from Wiley CMAExcel Learning System Part 1, Section A PQODDDDODOOE Miles CMA Review -Practce Questions from Wiley CMAexcel Learning System Part 1 Section A Question 1A- E506 Hot stuf, ne makes a boutique line of espresso machines that tsls with attached warranties. ‘Questions Wirt the journal entries forthe folowing events [An 2018, Hot stu sold 700 expresso machines with atached warranties to restaurants on account for $1,500 B. Hot stuff estimated that SOX ofthe machines would need repale during the fe ofthe waranty at» cost of $80 per machin for parts and labr. in 2018, Hot Stuf dd waranty repairs on 100 expresso machines. € OnDecember 31,2048, Ho tu accrued the lilt for future warranty werk Ifo stuf had sold those 700 espresso machines to restaurants on account for 1,500 each is extended warranties fr $100 each Hot Stff estimated tat SOX ofthe machines would need repair during the fe ofthe waranty ata cost of $80 pr mache for prt and labor. n 2018, Pop-Up dd warranty repairs on 100 espresso machines During December 2018, employees at Hot Stuff eamed wages of $70,000, Withhoing for these wages incuded $2280 for the employees’ share of soil securty (FCA), $700 for federal income ta, $2,200 for state income tax, and $500 for union dues The frm lz Incurred pay tax expenses that included $2,250 for its share of FICA, $200 for feral unemployment ta (su ‘Wire the journal entry orecrdthe firs wage expense for December. ‘6. Wirt the journal entry to record the ems payroll ax expense for December 1H. On December 15, 2038, Pop-Up borrowed $12,000 from the bank on a 7%, 4-month note. Write following journal ents Torecord the lsvance ofthe note, 4. Torecoré repayment ofthe note and interest on Ari5, 2018, UTA), and §700 for state unemployment taxMiles CMA Review - Practice Questions fram Wiley CMAexcel Learning System Part 2, Section A DOGEEEIE IEEE [Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part, Section A narMiles CMA Review - Practice Questions from Wiley CMAeicel Learning System Pat , Section A Question 1A-ES07 (on January 2, 2038, Done-Right Manufacturing issued $10,000,000 of 6%, S-year bonds when the market Interest ate for similar debt is 5K:The bonds pay interest semiannually ly and January 1 and Done Right se the effective interest method te account fr long-term debt “presentVaue——SCSC~*~ ia SSC SSC*R SC “Shale sumforS periods Om8305_Oaezei——O7ea53 074725 ‘Single sum for 10 periods 07810 074403 ©1381 0.55839 Anoity for S periods ois 457971432988 4.21236 Ano for 10 periods a7sze 85020772173 7.36000 Questions |A. Arete bonds esved at dicount or a premium? 18 How much cath di the frm gtforthe Bonds? c lesuance ofthe bonds on Januar 1, 2018 Payment of interest on Jy , 2018. Accrual ofinterest on December 31,2018, Payment of interest on Januory 1, 2018 6. After paying intrest on 1/1/18, the frm redeemed the bonds at 98 H. R.U. Sure, the CEO of Done lt, as asked yout explain why bonds are sometines sued ata premium, butsometimesisved a a count. What would you tel hi? Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1, Section A A29Miles OMA Review - Practice Questions from Wiley CMAexcel Learning System Part, Section A A30 Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part, Section A Question 1A-ESO8 |n 2018, We-Got Stuf, nc. purchased some land that it used to buld a factory Expenditures during the year ince $100,000 to buy the land $5,000 n Reator fees $3,000 in acrued property tax $10,000 to demolish an old bling onthe property $200 salvage value from the demolished bung, §$16,00 for architectural ees $58.00 for constrveton costs §7,00 for supervision during construction $1500 for months of insurance during construction Construction was completed in months $8400 for shrubs and fences 58,00 fo office furture Questions ‘A. Costof the and= B. Cost ofthe factry= € Weesor tuts lsosing ofa ruck Tat rgnally cost $50,000 and has $40,000n accumulated Gepredation Journal entry if We-Got tf elle the truck fr $11,000, | 1. Jounal entry if We-Got ttf XYZ sls the truck for $5,000 Journal ney if We-Got Stuff scraps the truck Journal entry if he truck Rad been fully deprecated (accumulated depreciation = acquistion cost) when iewasserapped . 1n2038, We-Got stuff exchanged equipment with Mercury Manufacturing ‘Wet Stull | Waren Manctatring [Eaioment oma —— [Stoo ~ $8000, esate epreon 50000 25,000 Faia (7) eo00 5,000 ah ven 70.00 Value of assets) that We-Got Stuff ges H. Valu of assets that We: Got stuf receives = 1k Gainorlosson the exchange for We-Got suf= 1. Valse of aset{s that Mercury Manufacturing eve 1K Vale of ase() that Mercury Manufacturing receives LL Gainorosson the exchange for Mercury Manufacturing = — IM, Journal entries ifthe transaction has commercial substancé 1 Onthe books of We Got Sut Ih Onthe books of Mercury Manufacturing NN Journal entries ifthe ansacton lacks commercial substance Tr Onthe books of We-Got Stuff 1 Onthe books of Mercury Manufectring aan‘Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Pat , Section A Miles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part, Section AMiles CMA Review - Practice Questions from Wiley CMAexcel Learning System Part 1, Section A a3 THA Miles CMA Review -Class Notes to Wiley CMAexcel Learning System Part 1, Section 8 Section B Planning, Budgeting & Forecasting B.1) Strategic Planning B.2) Budgeting Concepts B.3) Forecasting Techniques B.4) Budgeting Methodologies B.5) Annual Profit Plan and Supporting Schedules B.6) Top Level Planning & AnalysisMiles CMA Review - Class Notes to Wiley CMAexcel LeaPing System Part, Section & Topic Questions B.1) Strategic Planning 4 Instratepe Planning, PEST analysis best described as evaluating which of he following actors? 2. Polit, economic soci and technological nt, sustainably and tates Process efieny, scale and timing 4. Products, employees, strengths, and threats People, envrann 2. What type of plan formulated at the highest levels of management, takes the broadest view ofthe company andits environment the least quantifiable, and determines the future nature ofthe irs products, nd ts customers? 2 Shoreange plan 1. Long-range plan strategiepin ture plan 5 Acomponyhas developed ad implemented a wireless charging festure nto one of ast, No other competitor in the marketplace curently offer this featre. n marketing research stud, the vat malory of consumers indicated that they would pay premium for this feature. Which ane ofthe followings the best strategy to bring this product tothe market? ‘a Porters cost strategy Porter’ focus strategy Porters diferentiation tretegy 4. Porters segmentation strateay Miles CMA Review - Class Notes to Wiley CMAexcel Learning System Part 1, Section 8 B.2) Budgeting Concepts 44. Which one ofthe folowing best describes a eason why a companys budgeting should be based onthe company’ strategie pan? ‘Helps contro cost 0 that products can be sold proftably 1, ents resources needed to reach strategic goals {entifisthe external factors that have change from the prlor yar and those that remain the 4. Establishes standards to measure employee performance 2. An advantage of participatory budgatng that it a. minimizes the cost of developing budgets ied information known to management but not to employees ‘encourages acceptance ofthe budget by employees 44. reduces the effect on the budgetary process of employee biases 3. A company uses participative budgatng In oder to more easly meet budgetary goals the underestimates the amount of revenue and overestimates fed sellng and administrative expenses. Tiss an example of ‘lene budgeting Budgetary slack €. Zero-based budgeting 4. Budgetary variance‘Miles CMA Review -Class Notes to Wiley B.3) Forecasting Techniques 4. an accountant estimated the repair costs forthe company's plant facies fr next year ecrined the following probability dstributon Te accountant has det a ee [pista set “sza00900 | | a See eae |e era p0gOND To 3500000 aa —] accountant should projet for nest year’s on ‘Whats the estimated repalrcost thatthe a. $1,850,000 $1,925,000 «. §2975,000 4. $3,250,000 iyestabished a customer service department 2. Asoftware company recent “The manager of the custom time required to handle one customer call was 15 minute department estimates an 80% la Cumulative average time required to handle one ustome call b. 966 minutes © 120minutes 4. 150minutes ‘an accountant fra biotechnology company is working ona projection of next yea’ expenditures for the company’ laboratory eau maintenance expenditures, the accountant was ab Tan be expressed by thefllwing simple regression equation: Y= $20,000 + [$502 umber of hours the laboratory equipment hasbeen inservice For the previous Yes (Jetermined tobe 4500 hous. fhe accountant i projecting that X willbe 5,000 hou Should the accountant prec for ext year's maintenance expenditures? a. $225,000 b, $245,000 «. §250,000 4. $270,000 ‘catAexcel Leaning System Part 1, Section 8 operating budet er analying trial repr costs erating buset er the fest week the average ving curve. Under the cumulative averagetime learning model, the ty the fourth weak willbe: ent used in esearch nd development, By analyzing past oto determine tha future maintenance expenditures "The variable Xisthe the variable X was rset year, how much Miles CMA Review - Class Notes ta Wiley CMAexcel Leaning System Part 1, Section 8 B.4) Budgeting Methodologies 1 Which one ofthe folowing types of budgets wil alow management to best assess how costs will change baved on changes in cost drivers such as drect labor hours r machine hous? 2 olin budget i. Actiiy-based budget Production budget 4. combudget Stel Company has tasked the newly-hired budget manager wit restructuring re tgather information om each unt on their role. Then, 2. The controler of llenwoo the company's budget ystem. The controller would ike he sativa wth top management, examine each uit’ contrbutions tothe company as aw athe bjecve of eminating inficency and waste, each unt’ budget fr the folowing year wil dren thou regard to past budgets and with ite regard fr past operating results. This method of budget developmen ical: aati based budgeting Bb. proforma budgeting ©. flexble budgeting 4. ero-based budgeting sons, te summer season and the last wo weeks of February. the frm leases addtional production equipment and hires hniques woud bes this firm's |Amanufacturing frm hs certain peak sea During these periods of increased output, divena emporery employees Which one ofthe following budget tec needs? ia. Zero-based budgeting because ts based on manager input F Prjcebadeting because dseret nancial Information i avaiable Felc budeeting because allows for adjustments tothe budget based on actal activity evel 4 State budgeting because it shows the changes i sales or produeton levels