CMA (Certified Management Accountant) Practice Questions — All Questions
AllPlanning, Budgeting & ForecastingPerformance ManagementCost ManagementInternal ControlsFinancial Statement Analysis
4 questions
Internal Controls
Segregation of duties is an internal control that:
- a.Speeds up all transactions
- b.Prevents one person from controlling all parts of a transaction✓
- c.Eliminates the need for audits
- d.Increases fraud risk
Separating authorization, recording, and custody reduces fraud and error risk.
Internal Controls
The primary purpose of internal controls is to:
- a.Provide reasonable assurance about reliable reporting and asset safeguarding✓
- b.Guarantee zero fraud
- c.Maximize revenue
- d.Replace management judgment
Internal controls give reasonable (not absolute) assurance over reporting and assets.
Internal Controls
A preventive control is designed to:
- a.Detect errors after they occur
- b.Correct past errors
- c.Stop errors or fraud before they happen✓
- d.Report to regulators
Preventive controls aim to stop problems before they occur.
Internal Controls
Requiring a manager's approval before large purchases is an example of:
- a.A detective control
- b.A corrective control
- c.A compensating control
- d.An authorization (preventive) control✓
Approval requirements are preventive authorization controls.