Certified Management Accountant Trivia 3

Question 1

Transfer pricing is BEST described as:

Accepted Answer

The price set for goods or services exchanged between divisions of the same company

Answer

Transfer pricing refers to the prices charged when one segment of a company sells goods or services to another segment within the same organization.

Question 2

Which of the following is NOT a perspective included in the traditional balanced scorecard?

Accepted Answer

Supplier

Answer

The four traditional balanced scorecard perspectives are Financial, Customer, Internal Business Processes, and Learning and Growth; there is no Supplier perspective.

Question 3

Economic Value Added (EVA) is calculated as:

Accepted Answer

Net operating profit after tax minus a charge for invested capital

Answer

EVA = NOPAT − (WACC × Invested Capital), measuring whether a business earns more than its cost of capital.

Question 4

The concept of 'relevant costs' in decision-making refers to costs that are:

Accepted Answer

Future and differential between alternatives

Answer

Relevant costs are future costs that differ between decision alternatives; sunk costs are irrelevant because they cannot be changed.

Question 5

Under the perpetual inventory system, the Cost of Goods Sold account is updated:

Accepted Answer

Each time a sale is made

Answer

In a perpetual system, inventory records and COGS are updated continuously with each transaction, unlike the periodic system.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Trivia 3