IMA CMA-FINANCIAL-PLANNING-PERFORMANCE-AND-ANALYTICS Online Practice Questions and Exam Preparation

IMA CMA-FINANCIAL-PLANNING-PERFORMANCE-AND-ANALYTICS Online Questions & Answers

• Question 71:

  A company has the following accounts included in its trial balance as of December 31

  

  What amount of equity will be reported on me company's balance sheet as of December 31

  A. $626,500
  B. $657,500
  C. $92,500.
  D. $599,000.
  C. $92,500.

• Question 72:

  in preparing Klein Corporation's master budget for the following calendar year, the manager of the Production Department requested the purchase of a new piece of machinery with a purchase price of $150.000 in addition, the cost of installing the machine would total $13.000. The purchase price of the machine would be financed by a 6%. 5-year loan with interest due quarterly. The amount Klein Corporation should include in its Capital Expenditures Budget due to this purchase is:

  A. $13,000
  B. $22,000
  C. $163,000
  D. $172,000
  D. $172,000

• Question 73:

  In trying to predict the returns on the stock market, a novice investor collected data on the sightings of sperm whales off the eastern coast of North America and the performance of the Dow Jones Industrial Average (the Dow) A regression of the two variables resulted in a correlation coefficient of -0.90 or a coefficient of determination (r2) of 81%. The sightings of whales seemed to be negatively correlated with the performance of the Dow. The novice investor should _____

  A. conclude that there is a cause-and-effect relationship between the two variables
  B. track the sighting of sperm whales and buy the Dow when sightings are low: conclude that sperm whale sightings are a strong indicator of poor performance of the Dow
  C. conclude that the poor performance of the Dow leads to high sightings of sperm whales
  D. conclude that this is an example of spurious correlation
  D. conclude that this is an example of spurious correlation

• Question 74:

  Music Masters Inc. has three departments: Instrument Sales, Music Instruction and Recording Studio The three segments are staffed by different customer service personnel but share space and administrative staff Condensed income statement information follows.

  

  Management wants to eliminate the Recording Studio because of its losses. Because of the configuration of the building it is doubtful the space could be sublet and none of the common fixed costs would be eliminated.

  However, additional space allocated to either Instrument Sales or Music Instruction might increase revenue from those sources In making this decision, all of the following outcomes are correct except.

  A. elimination of the Recording Studio will increase net income by $10,000
  B. elimination of the Recording Studio will decrease net income by $10,000
  C. net income will remain the same if the Recording Studio is eliminated and Music Instruction revenue increases $20,000
  D. net income will increase if the Recording Studio is eliminated and instrument Sales increase $25,000
  B. elimination of the Recording Studio will decrease net income by $10,000

• Question 75:

  Explain whether ZFI's current overhead allocation method is appropriate.

  Essay

  Zhiliang Foods Inc. (ZFI) is a privately-held food distributor ZFI has two production departments' the Meat Department is labor-intensive. while the Bakery Department is highly automated ZFI applies a single overhead allocation rate, using the number of pounds produced as an allocation base for the whole company The expected annual overhead costs of ZFI for 100 million pounds produced are as follows (?in millions).

  

  ZFI has one payroll administrator in its Human Resources department, but most of the payroll related work is outsourced to a payroll service provider ZFI's payroll administrator is responsible for tracking the list of current employees and

  maintaining the most up-to-date employee information, including bank accounts for payroll direct deposits.

  Each pay period, the payroll administrator emails the information for all current employees' hours worked to the payroll service provider. The service provider then processes the payroll, makes direct deposits to employees' bank accounts,

  mails payroll stubs to employees' homes and emails payroll reports to ZFI's payroll administrator. The payroll administrator then makes payroll journal entries to ZFI's accounting system based on the payroll reports received ZFI's accountant

  prepares a bank reconciliation each month to ensure ZFI s payroll payments on ZFI's bank statement match the amounts shown on the payroll reports from the service provider.

  ZFl's management is evaluating the purchase of data encryption software and human resources management software next year. The human resource management software is expected to provide various human resources and payroll-

  related functions.

  In addition, the human resource software can generate a report to indicate the monthly employee turnover rate and the average service length of employees who have resigned. The system can also generate a report to indicate the main

  reasons for resignations and identify current employees who are at risk of resigning. The system will recommend actions to help retain these employees, such as more training opportunities or a pay raise.

  Time Value Table

  

  

  A. See the Answer below in Explanation details.
  B. PlaceHolder
  C. PlaceHolder
  D. PlaceHolder
  A. See the Answer below in Explanation details.

  ---

  Explanation

  ZFI’s payroll process has significant control weaknesses and the proposed systems would address several of them if implemented with disciplined governance. Today a single payroll administrator both maintains the employee master file-including bank account details for direct deposit-and records payroll journal entries after receiving reports from the outsourced provider, while hours worked are transmitted to the provider by email and the only independent check is a monthly bank reconciliation. This creates risks of ghost employees, unauthorized pay ‐rate or bank‐account changes, misdirected deposits, and data leakage in transit and at rest. It also means errors or fraud might persist for weeks because there is no independent, per-pay-period reconciliation of the payroll register to the approved time data and the HR master file.

  The minimum fixes are to segregate duties and strengthen preventive and detective controls around every payroll cycle. The employee master file, including bank account changes, should require dual authorization and maker–checker workflow outside of the person who posts accounting entries; bank account updates should be supported by documented employee requests, verified on a known channel, and-with direct deposit-validated by prenotes before first live payment. Time data must be captured in a system with supervisor approvals and transmitted to the provider via secure, automated interfaces (API/SFTP) with encryption in transit and at rest, not by email. Each pay period, an independent person should reconcile the provider’s preliminary payroll register to the approved time and to a headcount roll-forward (starting headcount + hires − terminations = ending headcount), review exception reports for new hires, terminations, bank-account or pay-rate changes, and approve the final payroll before release. Treasury should use a dedicated payroll bank account with ACH filters/blocks, and accounting should load payroll results via system interface rather than manual journal entry whenever possible. The outsourced provider should be governed through a SOC 1 Type 2 report review, service-level metrics, incident-response terms, and periodic audits of access and processing controls.

  Purchasing data-encryption software is justified because it directly mitigates the current exposure from emailing sensitive payroll and banking data; it should be paired with key-management procedures, multifactor authentication, and role-based access. Adopting a human resources management system is also advisable because it can centralize master-file maintenance with workflow and audit trails, integrate timekeeping and payroll interfaces, and generate monitoring analytics. The described capability to report turnover, tenure of leavers, and reasons for resignations-and to flag employees at risk-can support retention actions such as targeted training or compensation adjustments, but these analytics must be validated, privacy-preserving, and used with clear decision rights to avoid bias or inappropriate actions. If ZFI implements the HRMS with mandatory approvals, access reviews, and secure integrations to the payroll provider, it will materially strengthen payroll integrity and deliver better management information while aligning controls with the company’s outsourcing model.

• Question 76:

  Inherent risk factors involved in the revenue recognition process include each of the following except

  A. computerization of the process by which sates receipts and credit memoranda are recorded
  B. breakdown of segregation of duties controls
  C. Industry factors that affect pricing, terms and discounts
  D. legal factors that affect product warranties, returns and liabilities
  B. breakdown of segregation of duties controls

• Question 77:

  GorCo anticipates 10% sales growth each month for the next three months, and plans to sell 120.000 units of finished goods In the first month. The company plans production so that ending inventory is equal to 5% of the next month's budgeted sales On GorCo's production budget for the second month the number of finished goods units to be produced would be ______

  A. 131,340.
  B. 132,000.
  C. 132,600.
  D. 132,660.
  D. 132,660.

• Question 78:

  A timber company is evaluating its products to determine whether to continue to further process scrap wood into wood chips, or to just sell the scrap wood to another company. Which of the following statements best describes what the company should consider regarding the potential by-product-

  A. The company should consider an of the manufacturing costs for Doth products beyond the split-off point.
  B. The company should consider all joint costs throughout the process before it decides if it should process further.
  C. The company should consider all of the separable costs throughout the process as it is incremental.
  D. The company should consider the incremental operating income beyond the split-off point In Its decision.
  D. The company should consider the incremental operating income beyond the split-off point In Its decision.

• Question 79:

  Which of the following represents a significant deficiency m the design of controls-

  A. Failure to follow up and correct previously identified internal control deficiencies
  B. Inadequate controls over access to computer systems, data and files
  C. Evidence of misrepresentation by accounting personnel
  D. Management overrides of the accounting for transactions
  B. Inadequate controls over access to computer systems, data and files

• Question 80:

  Life-cycle costing is most effective when used with products that have a ______

  A. long development period and many costs incurred during manufacturing
  B. long development period and many costs incurred poor to manufacturing
  C. short development period and many costs Incurred during manufacturing
  D. short development period and few costs incurred poor to manufacturing
  B. long development period and many costs incurred poor to manufacturing