Cma Mock Exam Solution

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Fall 2011 Mock Entrance Examination 1 Solutions

© 2011 Certified Management Accountants of Ontario. All rights reserved. ®/™ Registered Trade-Marks/Trade-Marks are owned by the Certified Management Accountants of Ontario. No part of this document may be reproduced in any form without the permission of the copyright holder.

Fall 2011 – Mock Entrance Examination 1

TABLE OF CONTENTS

Examination: Answer Key ...................................................................................... 1 Strategic Management...................................................................... 3 Risk Management and Government ................................................ 13 Performance Management .............................................................. 25 Performance Measurement ............................................................. 76 Financial Management .................................................................... 95 Financial Reporting ........................................................................ 118 Cross Competencies ..................................................................... 164

Certified Management Accountants of Ontario

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Fall 2011 – Mock Entrance Examination 1

Answer Key
Question Answer Question Answer Question Answer Question Answer

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

a a b c b d a a c d a d a a c b b b d a b b b c d c c b c d

31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60

d d a c a a c b d d d c b d b b c a b d d c c b c c c b d d

61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90

c a c a a d a c d a d b b a c a d d d c b a b c d c b a d d

91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120

a b d c b a c a d d a c a c b c a a b b b a d d c b c a b a

Certified Management Accountants of Ontario

Page 1 (60 pages)

Fall 2011 – Mock Entrance Examination 1

Strategic Management
1. Answer: a. Although choices b), c) and d) are embodied in a mission statement, the ultimate purpose of the mission statement is to integrate b), c) and d) into the company’s strategy formulation process. Answer: a. Economic issues (choice b), demographics (choice c) and social values (choice d) are examples of economic, technological, political-legal and sociocultural factors that are examined in environmental scanning to determine trends in a company’s external environment. Organizational tactics (choice a) would be a factor to be considered in an internal (not external) environmental analysis. Answer: b. A supplier or group of suppliers can exert power over its buyers if the buyer’s costs of switching suppliers are significantly high (e.g. the cost of switching suppliers is higher than the savings experienced from using a new supplier). Distractors: a) The existence of substitute products increases the buyers’ power. c) When there are few large buyers, the suppliers have less power. d) When a product is a commodity, it is likely that it is mass-produced and there are many suppliers. This increases the buyer’s power. 4. Answer: c. Business level strategic issues pertain to how an organization attains and sustains competitive advantages (e.g. what customers to target, what products/services to sell to these customers, how to produce, sell and deliver the products/services). The issue of adding a new product line is a business level strategy. Distractors: a) Development of internal control procedures is an operational level issue. b) Selection of a new vendor is an operational level issue. d) Allocation of marketing costs is an operational level issue.

2.

3.

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Certified Management Accountants of Ontario

Fall 2011 – Mock Entrance Examination 1

5.

Answer: b. Changing from a differentiation strategy to a cost leadership strategy...
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