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CMA Foundation Accounting & Finance Questions
Practise accounting & finance (finance) for the Cost & Management Accountancy Foundation Examination: 10 multiple-choice questions, each with the correct answer and a worked explanation. Click an option to check it, or “New questions” for another set.
Accounting & Finance practice
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Q1.The time value of money means:
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Answer: B — A sum today is worth more than the same sum in the future
Money available now can be invested to earn a return.
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Q2.Find the compound interest on ₹3,000 at 20% per annum for 2 years, compounded annually.
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Answer: C — ₹1,320
A = P(1 + R/100)^T = 3,000 × 1.20^2 = 4,320; CI = A − P = ₹1,320.
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Q3.Revenue is recognised under accrual accounting when:
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Answer: B — It is earned (performance obligation satisfied)
Under IFRS 15 / ASC 606 revenue is recognised as obligations are satisfied.
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Q4.What is the present value of ₹9,000 received in 2 years at a 6% discount rate?
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Answer: C — ₹8,010
PV = FV/(1 + r)ⁿ = 9,000 / 1.06^2 = ₹8,010.
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Q5.Which statement shows a company’s cash inflows and outflows from operating, investing and financing activities?
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Answer: B — Cash flow statement
The cash flow statement groups cash flows into three activities.
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Q6.₹3,000 is invested at 8% compounded annually. What is it worth after 5 years?
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Answer: D — ₹4,408
FV = PV(1 + r)ⁿ = 3,000 × 1.08^5 = ₹4,408.
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Q7.A debit entry increases:
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Answer: A — Assets and expenses
In double entry, debits increase assets and expenses; credits increase liabilities, equity and revenue.
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Q8.Find the compound interest on ₹27,000 at 5% per annum for 2 years, compounded annually.
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Answer: D — ₹2,767.5
A = P(1 + R/100)^T = 27,000 × 1.05^2 = 29,767.5; CI = A − P = ₹2,767.5.
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Q9.Which ratio measures short-term liquidity?
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Answer: A — Current ratio
Current ratio = current assets ÷ current liabilities.
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Q10.What is the present value of ₹17,000 received in 10 years at a 6% discount rate?
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Answer: D — ₹9,493
PV = FV/(1 + r)ⁿ = 17,000 / 1.06^10 = ₹9,493.
How to approach accounting & finance questions
Master the accounting equation, the three financial statements and time value of money: FV = PV(1 + r)ⁿ, PV of an annuity = PMT × [1 − (1 + r)⁻ⁿ]/r. Ratios link the statements.
About CMA Foundation
Cost & Management Accountancy Foundation Examination — conducted by Institute of Cost Accountants of India (ICMAI). The entry level of the CMA course, covering accounting, law, business mathematics and statistics.
Original practice questions written for this site in the style and difficulty of each exam’s syllabus. They are not past papers and the site is not affiliated with any exam body. Exam patterns, marking schemes and syllabi change — always check the latest official notification.
CMA Foundation practice topics
| Topic | Section | Question source |
|---|---|---|
| Accounting & Finance | Finance | Calculated + question bank |
| Simple & Compound Interest | Quantitative aptitude | Calculated (new numbers every set) |
| Averages & Statistics | Quantitative aptitude | Calculated (new numbers every set) |
| Economy & Banking Awareness | General awareness | Question bank |