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Financial CMA Exam
Certified Management Accountant (Page 7 )

Updated On: 1-Feb-2026
Page 7 of 270
PDF with 1336 Questions
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The process of developing plans for a company's expected operations and controlling the operations to help carry out those plan is?

  1. Preparing a period budget.
  2. Preparing a master budget.
  3. Budgetary control
  4. Participative budgeting.

Answer(s): C

Explanation:

The budget has same structure as the organization itself. Is made up of a hierarchy of smaller budgets, each representing the plan of a division, department, or other unit in the organizational structure. Successful budgeting requires completion of plan that states organizational goals before the budgeting process. Prevention and detection of deviations from the budget are the control purposes of budgets.



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Intense rivalry among firms in an industry increases when there is

l). A low degree of product differentiation
ll). Low consumer switching costs

  1. l only
  2. ll only
  3. Both l and ll
  4. Neither l nor ll

Answer(s): C

Explanation:

The degree of product differentiation and the costs of switching from one competitor's product to another increase the intensity of rivalry and competition in an industry. Less differentiation tends to heighten competition based on price, with price cutting leading to lower profits. Low costs of switching products also increase competition



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Structural considerations affecting the threat of substitutes include all of the following except

  1. Relative prices
  2. Brand identity
  3. Cost of switching to substitutes
  4. Customers' inclination to use a substitute

Answer(s): B

Explanation:

Substitutes are types of goods and services that serve the same purpose. All products that can replace a good or service should be considered substitutes. For example, bicycles and cars are substitutes for public transportation. Structural considerations determine the effect substitutes have on one another. However, because substitutes affecting the threat of substitutes.



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After the goals of the company have been established and communication, the next step in the planning process is development of the?

  1. Production budget
  2. Direct materials budget
  3. Selling and administrative budget
  4. Sales budget

Answer(s): D

Explanation:

The sales budget is the first step in the operating budget process because it is needed to prepare all of the other budget. For example, the production budget cannot be prepared until the sales department has determined how many until are needed.



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An organization's policies and producers are part of its overall system of internal controls. The control function performed by policies and procedures is?

  1. Feedforward control
  2. Implementation control
  3. Feedback control
  4. Application control

Answer(s): A

Explanation:

Feedfroward control anticipates and prevents problem. Policies and procedures serve as feed-forward controls because they provide guidance on how an activity should be performed to best insure that an objective is achieved.



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