Excel as a Certified Management Accountant Enhance Financial Expertise

1. C E R T S GR A DE High Grade and Valuable Preparation Stuff High Grade and Valuable Preparation Stuff Business Certified-Management-Accountant Certified Management Accountant Certification Exam Questions And Answers PDF Format: For More Information – Visit link below: https://www.certsgrade.com/ Version = Version = Product Visit us athttps://www.certsgrade.com/pdf/certified-management-accountant/

2. Latest Version: 6.0 Question: 1 Which item is not found on a balance sheet? A.Deposits B.Patents C.Taxes paid D.Accrued expenses Answer: C Explanation: The balance sheet is a company's financial statement that summarizes assets, liabilities and shareholders' equity. It's most often the starting point for decisions made by the investment and financial communities to determine the scope of an organization's resources, its dependence on external financing, and its adaptability to new business conditions. A balance sheet contains three categories of accounts: •Assets-financial resources such as cash, accounts receivable, deposits, inventory, property, patents, and equipment. Assets are categorized as: oCurrent-assets easily convertible to cash oFixed- expected to be retained long-term •Liabilities- any obligation including accounts payable, accrued expenses, taxes payable, short- term loans, mortgages, and long-term loans. Liabilities are categorized as: oCurrent-due in a year or less from preparation date of balance sheet oLong-term- obligations that take longer than a year to pay off, such as leases and loans •Shareholders' equity- the company's net worth, or the difference between assets and liabilities. Equal to the shareholders' contributions (stock) and retained earnings Question: 2 Which item is included in the statement of cash flows? A.Investments by shareholders B.Net income C.Accrued income D.Payments made for products and services Answer: D Explanation: A cash flow statement reports the business' cash receipts and payments, classified by: Visit us athttps://www.certsgrade.com/pdf/certified-management-accountant/

3. •Operating activities- cash received from the sale of products and services, and payments for products and services used in the course of conducting business •Investing activities- purchase of property, plant, equipment, and other assets needed to conduct and grow the business •Financing activities- money contributed to the business by shareholders or borrowing Investments by shareholders are found in the statement of changes in shareholder's equity. Net income is found on the income statement, and accrued income is found on the balance sheet. Question: 3 Which section of a business' financial statements provides details on its liquidity? A.Notes to the financial statement B.Cash flow statement C.Management Discussion and Analysis D.Statement of changes in shareholders' equity Answer: D Explanation: The Management Discussion and Analysis (MD&A) is a section of a financial statement containing managerial comment on the business' performance during the period covered by the financial statement. The MD&A addresses the business' financial position, cash flow, liquidity and capital resources, among other things. Most MD&A sections will provide details about short- and long-term goals, new prospects or changes under consideration, and contain information about the business' management and management style. Question: 4 How is the Acid-Test Ratio computed? A.Current assets divided by current liabilities B.Cash, accounts receivable, and short-term investments divided by current liabilities C.Sales divided by inventory D.Accounts payable divided by cost of sales and multiplied by days in accounting period Answer: B Explanation: The Acid-Test, or Quick, ratio measures the ability of a business to pay its current liabilities. It is calculated by adding cash, accounts receivable, and short-term investments and then dividing the sum by the current liabilities. Other important metrics that help reveal a company's position with respect to current liabilities: •Current, or Cash, Ratio- measures ability to pay short-term liabilities using short-term assets, i.e., how quickly it can generate cash. Calculated by dividing current assets by current liabilities Visit us athttps://www.certsgrade.com/pdf/certified-management-accountant/

4. •Inventory turnover-determines how often inventory was replaced over a time period. Calculated by dividing sales by inventory •Days payable outstanding- measures the length of time a business takes to pay its accounts payable. Calculated by dividing accounts payable by cost of sales and multiplying the result by the number of days in the accounting period Question: 5 What financial ratio is used to measure an organization's risk? A.Debt-to-equity ratio B.Current ratio C.Acid-Test ratio D.Days sales outstanding in receivables Answer: A Explanation: As businesses use their capital structures to finance operations, measuring the degree of risk in a business is dependent on measuring the health of the capital structure. The Debt-To- Equity ratio divides total liabilities by shareholders' equity to determine a business' level of risk. A business using more debt will be more risky. The Current ratio and acid test ratio determine how quickly a business can turn products into cash, and how well a business can pay its current liabilities. When the Acid-Test ratio is lower than the Current ratio, it usually indicates the business is invested substantially in inventory. Days sales outstanding in receivables is the average number of days it takes for an organization to collect its accounts receivable. A high number shows weak sales or ineffectiveness in collecting receivables. Question: 6 Which financial ratio indicates how well an organization's net assets can cover its debt obligations? A.Earnings to Fixed Charges ratio B.Debt to total assets ratio C.Asset Coverage ratio D.Times Interest Earned ratio Answer: C Explanation: The Asset Coverage ratio measures a business' ability to cover its debt obligations with its assets, once all liabilities are satisfied. It's used to determine the extent of potential losses if a business were liquidated. The Earnings To Fixed Charges ratio, also known as the Fixed-Charge Coverage ratio, measures ability to pay fixed financing expenses from profits. The Debt To Total Assets ratio measures financial risk by showing how much of a business' assets have been financed with debt. The Times Visit us athttps://www.certsgrade.com/pdf/certified-management-accountant/

5. Interest Earned ratio measures of a business' ability to pay its debt obligations. It shows how many times an organization can cover its interest payments on a pretax basis. Question: 7 Analyzing a company's return on investment would not necessarily be useful in measuring... A.the earning potential of an asset B.profitability from operations C.how well an organization uses resources D.operational efficiency Answer: D Explanation: Return on investment (ROI) is normally used to measure the earning potential of an asset or product. Financial professionals use ROI to determine how well an organization utilizes its resources and to determine its financial strength. It can also be used to measure profitability from operations, which, in turn, is a measure of management's effectiveness. ROI would also provide indications of how well a business meets its goals and its competitive position. Profit margin on sales is used to determine operational efficiency, revealing how much income is received for each dollar of sales. Profit margin on sales can also be used to compare the business with competitors or industry peers. Question: 8 Which three components are used by the DuPont Model to determine return on equity? A.Net margin, asset turnover, and return on investment B.Net margin, asset turnover, and financial leverage C.Cost of investment, asset turnover, and financial leverage D.Cost of investment, asset turnover, and solvency Answer: B Explanation: The DuPont Model, first used within the DuPont Corporation, is used to clarify return on equity (ROE), breaking it down into three components to reveal how a business receives (or the specific sources of) this return. The three components are: •Net margin- net income divided by sales •Asset turnover- sales divided by total assets •Financial leverage total assets divided by average shareholder equity The DuPont formula calculates ROE by first calculating the three components, then multiplying them. By separating ROE into these elements, changes in ROE can be tracked over a period of time. Question: 9 Visit us athttps://www.certsgrade.com/pdf/certified-management-accountant/

6. Which profit margin calculation gives the best indication of earnings potential? A.Gross profit margin B.Operating profit margin C.Net profit margin D.Financing profit margin Answer: A Explanation: Gross profit margin is the percent of sales dollars that are not spent on expenses. It's calculated by dividing gross income by net sales. Gross profit margin is considered a better indication of earnings potential than just looking at earnings alone, since an earnings increase may not always be accompanied by a profit margin increase. A higher gross profit margin indicates a higher amount of money left over after a business pays its expenses, in turn indicating that this business is demonstrating good control over its costs. When an organization's costs have increased at a greater rate than earnings, the gross profit margin will go down. Operating profit margin is also known as return on sales, and helps measure operational efficiency. Net profit margin measures the proportion of revenue retained after paying variable production costs. Question: 10 Multinational corporations protect themselves against foreign currency translation exposure by... A.using a standard exchange rate B.hiring accountants from their subsidiaries' countries C.purchasing materials from foreign nations D.preparing consolidated financial statements Answer: D Explanation: Foreign currency translation exposure is the risk that the exchange rate conversions would alter the value of assets, liabilities, equity, or income. A multinational corporation can reduce this risk by using consolidation techniques for its financial statements. Consolidated financial statements are financial statements that include the accounting records of a multinational business' subsidiaries into the corporation's accounting records, resulting in one comprehensive financial statement. Another method to curtail the currency translation exposure risk is to use effective cost accounting evaluation procedures. The foreign currency translation exposure is recorded in the financial statements as either an exchange rate gain or an exchange rate loss. Visit us athttps://www.certsgrade.com/pdf/certified-management-accountant/

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