CMA Foundation Practice Set 1

An agreement made with a person of unsound mind is

1. A.Void✓
2. B.Voidable at the option of the other party
3. C.Valid and enforceable
4. D.Illegal

Correct answer: A

Under the Sale of Goods Act, 1930, a contract in which the ownership (property) in goods is transferred from the seller to the buyer for a price is called

1. A.An agreement to sell
2. B.A sale✓
3. C.A bailment
4. D.A pledge

Correct answer: B

A cheque, as defined under the Negotiable Instruments Act, 1881, is

1. A.A bill of exchange drawn on a specified banker and payable on demand✓
2. B.A promissory note payable after a fixed period
3. C.A bond issued by the government
4. D.A debenture issued by a company

Correct answer: A

Which of the following best describes 'corporate governance'?

1. A.The system of rules, practices and processes by which a company is directed and controlled✓
2. B.The marketing strategy adopted by a firm
3. C.The taxation policy applicable to a firm
4. D.The recruitment policy of the human resources department

Correct answer: A

The process of communication begins with the

1. A.Receiver
2. B.Sender/Source✓
3. C.Feedback
4. D.Channel/Medium

Correct answer: B

A business letter written to seek information about goods, their prices and terms of supply is called a(n)

1. A.Complaint letter
2. B.Enquiry letter✓
3. C.Sales letter
4. D.Circular letter

Correct answer: B

Effective listening, as an interpersonal skill, primarily requires

1. A.Interrupting the speaker frequently to clarify points
2. B.Active attention to the speaker along with appropriate feedback✓
3. C.Multitasking while the other person speaks
4. D.Ignoring non-verbal cues such as tone and body language

Correct answer: B

The double entry system of bookkeeping is based on the principle that every debit entry must have a corresponding

1. A.Credit entry of an equal amount✓
2. B.Debit entry of an equal amount
3. C.Adjustment entry
4. D.Separate journal entry

Correct answer: A

Closing stock, when not given in the trial balance but provided as additional information, is valued in the final accounts at

1. A.Cost price, irrespective of market value
2. B.Market price, irrespective of cost
3. C.Cost price or net realisable value, whichever is lower✓
4. D.Selling price including profit margin

Correct answer: C

A bank overdraft, as shown in the pass book, appears in the bank column of the cash book as a

1. A.Debit balance
2. B.Credit balance✓
3. C.Contra entry only
4. D.Suspense account entry

Correct answer: B

In the accounts of a Not-for-Profit Organisation, the excess of income over expenditure for a period is termed

1. A.Profit
2. B.Surplus✓
3. C.Dividend
4. D.Contribution

Correct answer: B

Cost accounting is primarily concerned with the

1. A.Ascertainment and control of cost✓
2. B.External financial reporting to shareholders only
3. C.Computation of income tax liability
4. D.Valuation of shares for stock exchange listing

Correct answer: A

The Re-Order Level of a material is generally calculated as

1. A.Maximum consumption × Maximum re-order period✓
2. B.Minimum consumption × Minimum re-order period
3. C.Average consumption alone
4. D.The maximum stock level

Correct answer: A

In a cost sheet, 'Prime Cost' consists of

1. A.Direct material cost, direct labour cost and direct expenses✓
2. B.Direct material cost only
3. C.Factory overheads and direct material cost
4. D.Total cost less profit margin

Correct answer: A

If x² = 64, the positive value of x is

1. A.6
2. B.8✓
3. C.16
4. D.4

Correct answer: B

The solution of the linear equation 2x + 5 = 15 is

1. A.x = 5✓
2. B.x = 10
3. C.x = 7.5
4. D.x = 4

Correct answer: A

The determinant of a 2×2 identity matrix is

1. A.0
2. B.1✓
3. C.2
4. D.-1

Correct answer: B

The future value of ₹1,000 invested for 2 years at 10% per annum simple interest is

1. A.₹1,100
2. B.₹1,200✓
3. C.₹1,210
4. D.₹1,000

Correct answer: B

Data collected directly from respondents for the first time, for a specific purpose, is called

1. A.Primary data✓
2. B.Secondary data
3. C.Grouped data
4. D.Discrete data

Correct answer: A

For the data set 2, 4, 4, 6, 8, the arithmetic mean is

1. A.4
2. B.4.8✓
3. C.5
4. D.6

Correct answer: B

When a single fair die is rolled once, the probability of getting an even number is

1. A.1/2✓
2. B.1/3
3. C.1/6
4. D.2/3

Correct answer: A

Business economics applies economic theory and analytical tools to solve

1. A.Practical business problems✓
2. B.Political disputes
3. C.Legal controversies
4. D.Social customs

Correct answer: A

An increase in the price of a complementary good (e.g., a rise in the price of petrol) generally leads to

1. A.An increase in demand for the related good (e.g., cars)
2. B.A decrease in demand for the related good (e.g., cars)✓
3. C.No change in demand for the related good
4. D.An increase in supply of the related good

Correct answer: B

The Law of Diminishing Marginal Returns typically operates in the

1. A.Short run, when at least one factor of production is fixed✓
2. B.Long run only, when all factors are variable
3. C.Very long run only
4. D.It never operates in production theory

Correct answer: A

A market structure characterised by a single seller of a product with no close substitutes is called

1. A.Perfect competition
2. B.Monopoly✓
3. C.Oligopoly
4. D.Monopolistic competition

Correct answer: B

NITI Aayog, established in 2015, replaced which erstwhile institution in India's economic planning framework?

1. A.The Planning Commission✓
2. B.The Finance Commission
3. C.The Reserve Bank of India
4. D.The Securities and Exchange Board of India

Correct answer: A

The four basic functions traditionally attributed to management are planning, organising, directing and

1. A.Controlling✓
2. B.Marketing
3. C.Financing
4. D.Auditing

Correct answer: A

A plan formulated for a specific, non-recurring situation, and used only once, is called a

1. A.Standing plan
2. B.Single-use plan✓
3. C.Policy
4. D.Standard procedure

Correct answer: B

The traditional '4 Ps' of the marketing mix consist of Product, Price, Place and

1. A.Promotion✓
2. B.People
3. C.Profit
4. D.Planning

Correct answer: A

The systematic process of evaluating an employee's job performance and productivity is known as

1. A.Performance appraisal✓
2. B.Recruitment
3. C.Induction
4. D.Job analysis

Correct answer: A