Free ACCA Management Accounting (MA) Practice Questions

Sample Practice Questions

Try these 10 sample questions from the ACCA Management Accounting (MA) practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1A consultancy wants to measure the resources consumed by each client assignment. Which accounting activity directly provides this cost information?

   1. A.Preparing external financial statements
   2. B.Recording costs by individual assignmentCorrect answer: B
   3. C.Reviewing the statutory audit opinion
   4. D.Reconciling customers' payment balances

   Explanation: Kaplan states, "It is also used to establish costs for particular activities or responsibility centres." Recording assignment costs supplies the required cost information. External reporting, audit opinions and payment reconciliation do not establish resource consumption by assignment.

   Reference: Kaplan Management Accounting Study Text — public preview — Chapter 1, p. 2, Management and Cost accounting

2. 2An analyst wants every possible group of 40 customer accounts from a complete list to have the same chance of selection. Which sampling method meets this design?

   1. A.Quota sampling
   2. B.Systematic sampling
   3. C.Cluster sampling
   4. D.Simple random samplingCorrect answer: D

   Explanation: Statistics Canada states, "each possible sample also has an equal chance of being selected." That is the defining requirement for a simple random sample. Systematic designs restrict the possible combinations, cluster designs select groups, and quota selection does not give every combination an equal chance.

   Reference: Statistics Canada — Probability sampling — Simple random sampling

3. 3Under the basic inventory model, annual demand and cost per order are unchanged. If order quantity increases, how do annual ordering cost and annual holding cost normally change?

   1. A.Both costs decrease
   2. B.Both costs increase
   3. C.Ordering cost decreases and holding cost increasesCorrect answer: C
   4. D.Ordering cost increases and holding cost decreases

   Explanation: ACCA states that as order quantity rises, "the number of orders decreases and the total annual re-order costs decrease." It also explains that average inventory and holding cost rise. Larger orders mean fewer orders but more inventory held on average, creating the trade-off the EOQ balances.

   Reference: ACCA Inventory control — EOQ — effect of order quantity

4. 4A business has agreed an expansion plan and now expresses its expected sales, staffing and expenditure numerically for the next year. Which purpose of budgeting is being performed?

   1. A.Recording only transactions already completed
   2. B.Replacing the business plan with external financial statements
   3. C.Quantifying the agreed business planCorrect answer: C
   4. D.Determining the market value of the company's shares

   Explanation: ACCA states that budgeting "allows for the quantification of the business plan." Turning the agreed expansion into numerical operating and financial expectations performs that planning function. It is not historical bookkeeping, statutory reporting or share valuation.

   Reference: ACCA pilot answers — purposes of budgeting — Answer 5(a), budgeting as a planning aid

5. 5In a standard costing system, what does a standard unit cost represent?

   1. A.The average selling price achieved last period
   2. B.The predetermined cost for specified working conditionsCorrect answer: B
   3. C.The cash paid for all production in the current month
   4. D.The highest actual unit cost recorded in the factory

   Explanation: The source states: "A standard cost for a product or service is a predetermined unit cost set under specified working conditions.". It is a predetermined benchmark, not selling price, aggregate cash expenditure or an observed maximum.

   Reference: Kaplan Performance Management — Revision of MA topics — Chapter 1, p. 3, Standard costing

6. 6How should an organisation's mission statement guide performance measurement?

   1. A.By specifying every transaction to record
   2. B.By replacing measurable objectives with a slogan
   3. C.By defining its purpose from which relevant measures can be developedCorrect answer: C
   4. D.By requiring identical indicators for every organisation

   Explanation: ACCA states: "The primary required tasks are often found in the organisation’s mission statement as it is there that the organisation’s purpose should be defined.". Measures should follow the organisation's purpose. The mission is neither a transaction manual nor a substitute for quantified objectives, and different purposes require different measures.

   Reference: ACCA Performance indicators — Performance

7. 7Who is the principal intended user of a management accounting report comparing the profitability of alternative service packages?

   1. A.The bank assessing published annual accounts
   2. B.The tax authority checking a tax return
   3. C.The manager deciding which package to offerCorrect answer: C
   4. D.The shareholder reviewing statutory statements

   Explanation: The comparison table identifies management accounting information as mainly for "Internal use e.g. managers and employees." The manager making the service decision is the internal user; the other users receive external reporting for different purposes.

   Reference: Kaplan Management Accounting Study Text — public preview — Chapter 1, p. 3, Illustration 1 — Information mainly produced for

8. 8A researcher chooses a random starting record and then takes every twelfth record from a customer list. What sampling method is being used?

   1. A.Systematic samplingCorrect answer: A
   2. B.Quota sampling
   3. C.Cluster sampling
   4. D.Stratified sampling

   Explanation: Statistics Canada explains, "Systematic sampling means that there is a gap, or interval, between each selected unit in the sample." The fixed interval after a random start identifies this design. Quotas, selection of whole clusters and separate samples from every stratum use different procedures.

   Reference: Statistics Canada — Probability sampling — Systematic sampling

9. 9Daily material demand is constant at 45 units and supplier lead time is exactly six days. No safety inventory is required. At what inventory level should a replenishment order be placed?

   1. A.270 unitsCorrect answer: A
   2. B.45 units
   3. C.225 units
   4. D.315 units

   Explanation: ACCA gives "Re-order level (ROL) = Demand in lead-time". Demand during six days is 45 × 6 = 270 units. B covers one day, C covers five days and D covers seven days; neither missing nor adding a day's cover matches the stated lead time.

   Reference: ACCA Inventory control — Re-order levels — Constant demand, fixed finite lead-time

10. 10Sales plans call for output that exceeds the capacity included in the production department's draft budget. Which budgeting purpose is served by reconciling the two drafts before approval?

    1. A.Coordinating interdependent business activitiesCorrect answer: A
    2. B.Auditing the published financial statements
    3. C.Eliminating uncertainty from all future demand
    4. D.Replacing production planning with sales recording

    Explanation: ACCA states: "The co-ordination of business activities will be aided through the budgeting process. Areas of imbalance, for example between production capacity available and that required to satisfy demand, may be identified and investigated." Reconciling sales demand and available production capacity coordinates interdependent plans. It does not audit external statements, eliminate all demand uncertainty or replace production planning with historical sales recording.

    Reference: ACCA pilot answers — purposes of budgeting — Answer 5(a), co-ordination of business activities