New Uplift - CMA US Scholarship Test

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New Uplift - CMA US Scholarship Test

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1. Another way to write the accounting equation for changes in equity from one period to the next is:

2 points

A. Closing Assets – Closing Liabilities – Dividends = Opening Equity + Profit

B. Closing Assets – Profit – Dividends = Closing Equity – Closing Liabilities

C. Closing Assets – Closing Liabilities – Opening Equity + Dividends = Profit

D. Closing Assets + Profit – Dividends – Closing Liabilities = Closing Equity

Clear selection

2. Which one of the following would not be classified as a current liability?

2 points

A. Rent for the current year received on January 2 of the current year.

B. Ten-year bonds sold 110 months ago

C. A security deposit received from a renter for a one-year lease.

D. Undistributed stock dividends

Clear selection

3. Long-term debt should be included in the current section of the statement of financial position if

2 points

A. It matures within the year and will be retired through the use of current assets.

B. It is to be converted into common stock before maturity.

C. Management plans to refinance it within the year.

D. A bond retirement fund has been set up for use in its scheduled retirement during the next year

Clear selection

4. The primary objective of financial statement reporting is to meet the needs of

2 points

A. Officers and auditors.

B. Investors and creditors.

C. Supervisors and managers.

D. Staff and customers.

Clear selection

5. All of the following are elements of an income statement except

2 points

A. Revenue.

B. Gains and losses.

C. Expenses.

D. Shareholders' equity.

Clear selection

6. The financial statement that provides a summary of the firm’s operations for a period of time is the

2 points

A. Statement of retained earnings.

B. Income statement.

C. Statement of shareholders’ equity.

D. Statement of financial position.

Clear selection

7. To calculate cash flows using the indirect method, which one of the following items must be added back to net income?

2 points

A. Interest income.

B. Revenue.

C. Depreciation expense.

D. Marketing expense.

Clear selection

8. A company has 1,000 shares of $10 par value common stock and $5,000 of retained earnings. Two proposals are under consideration. The first is a stock split giving each shareholder two new shares for each share formerly held. The second is to declare and distribute a 50% stock dividend.

The stock split proposal will _____ earnings per share _____ than will the proposal for a stock dividend.

2 points

A. Decrease, Less

B. Increase, More

C. Increase, Less

D. Decrease, More

Clear selection

9. Which one of the following management considerations does the company usually address first in strategic planning?

2 points

A. Recent annual budgets.

B. Overall objectives of the company.

C. Structure of the organization.

D. Outsourcing.

Clear selection

10. Contingency planning is a process that companies undertake to:

2 points

A. Prepare for future, external events.

B. Understand how customer expectations have changed.

C. Make certain that their capacity will be able to meet the expected demand as well as decide how to obtain this capacity.

D. Determine how to obtain the necessary financing for the future.

Clear selection

11. The following sequence of steps are employed by a company to develop its annual profit plan.

Planning guidelines are disseminated downward by top management after receiving input from all levels of management. A sales budget is prepared by individual sales units reflecting the sales targets of the various segments. This provides the basis for departmental production budgets and other related components by the various operating units. Communication is primarily lateral with some upward communication possible. A profit plan is submitted to top management for coordination and review. Top management's recommendations and revisions are acted upon by middle management. A revised profit plan is resubmitted for further review to top management. Top management grants final approval and distributes the formal plan downward to the various operating units.

This outline of steps best describes which one of the following approaches to budget development?

2 points

A. Bottom-up approach.

B. Imposed budgeting by top management.

C. Top-down approach.

D. Total justification of all activities by operating units.

Clear selection

12. Which of the following controls would most likely minimize defects in finished goods because of poor quality raw materials?

2 points

A. Proper handling of work-in-process inventory to prevent damage.

B. Implementation of specifications for purchases.

C. Timely follow-up on unfavorable usage variances.

D. Determination of spoilage at the end of the manufacturing process.

Clear selection

13. The basic concepts implicit in internal accounting controls include the following.

The cost of the system should not exceed benefits expected to be attained. The overall impact of the control procedure should not hinder operating efficiency.

Which one of the following internal accounting controls recognizes these two factors?

2 points

A. Reasonable assurance.

B. Management responsibility.

C. Methods of data processing.

D. Limitations.

Clear selection

14. Which one of the following auditor findings would most likely raise a red flag about a company’s internal control environment?

2 points

A. Only select committees of the board have access to outside attorneys.

B. The company has an established independent audit committee.

C. The role of the company’s CEO and board chairman are separate.

D. The board nominations committee selects only independent directors.

Clear selection

15. When an organization has strong internal control, management can expect various benefits. The benefit least likely to occur is

2 points

A. Reduced cost of an external audit.

B. Availability of reliable data for decision-making purposes.

C. Elimination of employee fraud.

D. Some assurance of compliance with the Sarbanes-Oxley Act of 2002.

Clear selection

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