I85PREP
⌘ K
ACCA MA study materials
ACCA MA study resources

ACCA MA practice questions

One question at a time. Build your ACCA MA understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Management information

Which statement best explains the difference between data and information?

  1. Data is unprocessed raw facts, whereas information is data that has been processed and given meaning. Correct answer.
  2. Data is used by senior managers, whereas information is used by operational staff.
  3. Data is always numerical, whereas information is always text-based.
  4. Data is stored electronically, whereas information is stored on paper.

Explanation

Data consists of raw, unprocessed facts and figures that on their own have little meaning. Information is produced when data is processed, organised and presented in a context that makes it useful to the person receiving it.

Question 2Management information

A report on a proposed investment is delivered to the board two weeks after the investment decision has already been taken. Which quality of good information has been lost?

  1. Understandability
  2. Timeliness Correct answer.
  3. Completeness
  4. Accuracy

Explanation

Timeliness means information is available at the point when it is needed to support a decision. Information received after the decision has been made cannot influence that decision and therefore has little or no value.

Question 3Management information

Which of the following is an external source of information for a company preparing a market analysis?

  1. A published government economic forecast Correct answer.
  2. The company's own sales ledger
  3. The company's payroll records
  4. The company's production cost records

Explanation

External information originates from outside the organisation, for example government statistics, trade publications or market research reports. Internal records such as ledgers, cost records and payroll data are generated within the business itself.

Question 4Management information

Within an information system, what is the purpose of feedback?

  1. It compares actual results with the plan so that corrective action can be taken. Correct answer.
  2. It stores historical data for future reference.
  3. It captures data at the point where a transaction occurs.
  4. It converts raw data into summarised reports.

Explanation

Feedback is the control element of a system: output is measured and compared with the desired or planned outcome, and the comparison triggers corrective action. This loop is what allows management to keep performance on track.

Question 5Management information

Under the principle of cost-effectiveness, management information should be produced only when:

  1. it is required by company policy
  2. it has been requested by a senior manager
  3. it can be produced using existing computer systems
  4. the benefit it provides exceeds the cost of producing it Correct answer.

Explanation

Cost-effectiveness compares the value of the benefit derived from information with the cost of obtaining it. Information is worth producing only where its contribution to decision-making outweighs the resources expended on it.

Question 6Management information

Which type of information would a production supervisor most appropriately use when making daily machine scheduling decisions?

  1. External information on competitor pricing
  2. Tactical information summarising monthly budget variances
  3. Strategic information covering a five-year horizon
  4. Operational information that is detailed and produced frequently Correct answer.

Explanation

Operational information supports day-to-day activities at the lowest level of management; it is detailed, largely internal and produced frequently. Daily scheduling decisions therefore require this operational level of information.

Question 7Management information

A marketing manager receives a detailed monthly report on factory machine maintenance costs. In terms of the qualities of good information, the report most clearly lacks:

  1. accuracy
  2. completeness
  3. timeliness
  4. relevance Correct answer.

Explanation

Relevance requires that information relates to the responsibility and decisions of the user receiving it. Factory maintenance costs have no bearing on marketing decisions, so the report is irrelevant to that manager regardless of how accurate or timely it is.

Question 8Management information

Which characteristic best describes information used for strategic planning?

  1. Aggregated, forward-looking and largely external in focus Correct answer.
  2. Concerned mainly with recording past transactions
  3. Produced daily for the control of operations
  4. Highly detailed and focused on internal transactions

Explanation

Strategic planning takes place at the top of the organisation and looks to the long term, so the supporting information is summarised rather than detailed, forward-looking rather than historical, and draws heavily on external sources such as markets and competitors.

Question 9Management information

A company commissions a market research agency to survey potential customers about a new product. The survey results are:

  1. secondary data because an agency carried out the survey
  2. secondary data because the results are quantitative
  3. primary data collected specifically for the company's purpose Correct answer.
  4. primary data because the results will be published

Explanation

Data is primary when it is collected specifically for the purpose in hand, whoever physically gathers it. Because the survey was designed and gathered for this particular product decision, it is primary data even though an external agency performed the fieldwork.

Question 10Management information

Which processing method is most appropriate for an airline seat reservation system where a seat must be confirmed immediately?

  1. Overnight offline processing
  2. Batch processing
  3. Periodic processing at the month end
  4. Real-time processing Correct answer.

Explanation

Real-time processing updates and confirms records at the moment the transaction is entered, which is essential where the outcome is needed immediately. Batch processing collects transactions and processes them later, which would allow seats to be double-booked.

Question 11Management information

What is the main feature of an enterprise resource planning (ERP) system?

  1. It stores data solely for external reporting to regulators
  2. It removes the need for any internal controls in the business
  3. It is used only for preparing the annual financial statements
  4. It integrates data from all business functions into a single system and database Correct answer.

Explanation

An ERP system links functions such as sales, purchasing, production, inventory and accounting through one shared database. This gives a single source of data across the organisation and reduces duplication and inconsistency between departments.

Question 12Management information

Which set of characteristics is traditionally used to describe big data?

  1. Accuracy, brevity and clarity
  2. Volume, velocity and variety Correct answer.
  3. Input, processing and output
  4. Relevance, timeliness and cost

Explanation

Big data is characterised by high volume, high velocity of generation and a wide variety of formats, to which veracity is often added. These features make traditional database tools unsuitable for storing and analysing it.

Question 13Management information

A retailer analyses last year's sales records to establish which product lines sold best in each region. This analysis is best described as:

  1. diagnostic analytics
  2. predictive analytics
  3. descriptive analytics Correct answer.
  4. prescriptive analytics

Explanation

Descriptive analytics summarises historical data to show what happened, for example which products sold best. It provides insight into past performance rather than forecasting the future or recommending actions.

Question 14Management information

Data mining is best described as:

  1. the encryption of sensitive customer records
  2. the use of software to search large databases for previously unknown patterns and relationships Correct answer.
  3. the manual entry of transactions into an accounting ledger
  4. the routine backing up of large databases

Explanation

Data mining applies analytical techniques to large data sets to uncover hidden patterns, correlations and trends that were not previously known. The results can then inform marketing, pricing and operational decisions.

Question 15Management information

Which of the following is a genuine benefit of holding management information in a cloud-based system?

  1. Data held in the cloud can never be lost
  2. The organisation no longer needs any data security controls
  3. The organisation automatically owns all the hardware used
  4. Authorised users can access information remotely from multiple locations Correct answer.

Explanation

Cloud services allow authorised users to reach data over the internet from wherever they are, which supports flexible and remote working. Responsibility for security and control is shared with the provider but is not removed.

Question 16Management information

Which control best protects the confidentiality of sensitive employee data held on a company network?

  1. Printing the data for all departmental managers
  2. Taking daily backups of the data
  3. Restricting access rights to authorised users only Correct answer.
  4. Processing the data in batches

Explanation

Confidentiality is protected by ensuring only people with a legitimate need can view the data, which is achieved through access controls such as user rights and passwords. Backups protect availability rather than confidentiality.

Question 17Management information

A manager uses a spreadsheet to see how reported profit changes when the selling price per unit is varied. This is an example of:

  1. a transaction processing system
  2. what-if analysis using a spreadsheet model Correct answer.
  3. word processing of a management report
  4. a data warehouse query

Explanation

Spreadsheets are well suited to sensitivity or what-if analysis because changing one input cell recalculates all dependent figures instantly. This lets managers explore the effect of alternative assumptions before deciding.

Question 18Management information

What is the most likely consequence of supplying managers with large volumes of unfiltered information?

  1. Automatic improvement in the accuracy of the underlying data
  2. Information overload, making it harder to identify what is relevant Correct answer.
  3. Lower total costs of producing information
  4. Improved decisions because all available facts are present

Explanation

When too much information is supplied, users cannot easily isolate the relevant items and decision quality suffers. Good information should be concise and filtered so that the significant points stand out.

Question 19Management information

An exception report is designed to:

  1. highlight only those items that differ significantly from plan or expectation Correct answer.
  2. summarise the annual financial statements
  3. show every transaction processed during the period
  4. list all employees and their salary details

Explanation

Exception reporting applies the principle of management by exception by drawing attention only to significant deviations from plan. This focuses managerial attention where corrective action is most needed and avoids unnecessary detail.

Question 20Management information

Which statement about the value of information is correct?

  1. Information is valuable only if it can change a decision, and its value should exceed its cost Correct answer.
  2. Information has no cost to produce once a computer system exists
  3. The value of information always equals the cost of producing it
  4. Providing more information always increases its value

Explanation

The value of information lies in its ability to improve a decision, so information that cannot alter any decision has no decision value. Because gathering information consumes resources, it is worth obtaining only where the expected benefit exceeds the cost.

Question 21Management information

A key advantage of a database system over separate file-based systems is that:

  1. it removes the need for data entry by users
  2. it removes the need for backup procedures
  3. it guarantees that all data held is free from error
  4. data is stored once and shared, reducing duplication and inconsistency Correct answer.

Explanation

In a database, related data is held once in a structured form and shared by many applications, which avoids the duplication and conflicting versions typical of separate files. This also makes updating and reporting more reliable across the organisation.

Question 22Management information

Which of the following is a general IT control rather than an application control?

  1. A check that the quantity on a sales invoice does not exceed the quantity ordered
  2. A batch total check when sales invoices are processed
  3. A range check on hours worked entered into the payroll system
  4. Password controls governing access to the network Correct answer.

Explanation

General IT controls apply to the whole computer environment, covering matters such as access security, backup and program development. Application controls, by contrast, are built into a specific application to ensure the completeness and accuracy of the data it processes.

Question 23Management information

A document that is sent out to a customer and later returned to the organisation, where its data is then captured for processing, is known as:

  1. a turnaround document Correct answer.
  2. a source document
  3. a journal voucher
  4. an exception report

Explanation

A turnaround document is one the organisation creates and issues, which the external party completes or returns, so the data can be read back into the system. Because it is prepared outside the organisation, it must be carefully checked on return.

Question 24Management information

In the provision of management information, the management accountant's main role is to:

  1. audit the annual financial statements
  2. design the organisation's advertising campaigns
  3. provide relevant, reliable and timely information to support planning, control and decision-making Correct answer.
  4. maintain the fixed asset register and nothing else

Explanation

The management accountant gathers, analyses and communicates financial and non-financial information for internal users. The purpose is to help managers plan, control operations and make informed decisions.

Question 25Management information

Which sequence correctly describes the control cycle supported by management information?

  1. Take corrective action, compare with plan, plan, measure
  2. Compare with plan, plan, measure, take corrective action
  3. Plan, measure actual performance, compare with plan, take corrective action Correct answer.
  4. Measure, plan, take corrective action, compare with plan

Explanation

Control begins with a plan or standard, against which actual performance is measured. The comparison of actual with plan identifies variances, and corrective action is then taken to bring performance back on course.

Question 26Management information

Which statement best describes the relationship between data and information?

  1. Information is raw facts collected from source documents before processing.
  2. Information is data processed into a meaningful form for its user. Correct answer.
  3. Data is the output produced when information is summarised for a report.
  4. Data and information are interchangeable terms for any recorded fact.

Explanation

Data are raw, unprocessed facts, while information is data that has been sorted, summarised or calculated so that it has meaning for a particular user. Processing is therefore what turns data into information, so the two terms are not interchangeable.

Question 27Management information

A system that stores rules captured from experienced staff and applies them to individual cases to recommend a course of action, such as whether to grant credit, is best described as:

  1. an expert system Correct answer.
  2. an executive information system
  3. a management information system
  4. a transaction processing system

Explanation

An expert system contains a knowledge base of rules derived from human specialists and an inference engine that applies those rules to the facts of a case. The other systems process transactions, summarise data for reports or present high-level indicators, but none of them encodes specialist knowledge in rule form.

Question 28Management information

Which activity is most suited to batch processing?

  1. Producing the monthly payroll for 2,000 employees Correct answer.
  2. Checking seat availability when a flight is booked
  3. Confirming a customer's card payment at a supermarket till
  4. Updating inventory records the moment an item is scanned

Explanation

Batch processing groups similar transactions and processes them together at a scheduled time, which suits high-volume, non-urgent work such as a monthly payroll. Transactions that must be confirmed immediately require real-time processing instead.

Question 29Management information

A manager wants to show how the number of customer complaints has changed in each month over the last two years. Which presentation method is most suitable?

  1. A table of raw data
  2. A pie chart
  3. A scatter diagram
  4. A line graph Correct answer.

Explanation

A line graph plots a series of values against successive time periods, so movements and trends over time are immediately visible. Pie charts show proportions of a total at one point in time, scatter diagrams show the relationship between two variables, and a raw table makes the trend hard to see.

Question 30Management information

A retailer codes its products so that the first two digits identify the department, the next two digits identify the product group and the last three digits identify the individual item. This is an example of:

  1. a hierarchical code Correct answer.
  2. a mnemonic code
  3. a block code
  4. a sequence code

Explanation

A hierarchical code is built from parts, each of which carries meaning, moving from a broad classification to a narrow one. Here each block of digits narrows the classification from department to product group to item, which is exactly how a hierarchical code works.

Question 31Management information

Information produced for management control (tactical) decisions, rather than for strategic planning, is most likely to be:

  1. based mainly on external sources such as economic forecasts
  2. highly detailed and used to schedule tomorrow's deliveries
  3. concerned mainly with the long-term direction of the whole organisation
  4. a monthly budget report summarised for a department Correct answer.

Explanation

Tactical information supports management control over the medium term, so it is summarised to department level and compares actual performance with plans or budgets at intervals such as a month. Strategic information is longer term and more external, while operational information is detailed and immediate.

Question 32Management information

A company bases its sales forecast on published national population and income statistics. In this context the statistics are:

  1. secondary internal data
  2. primary external data
  3. secondary external data Correct answer.
  4. primary internal data

Explanation

Data are secondary when they were collected by someone other than the user and for a different purpose, and external when they originate from outside the organisation. Published national statistics satisfy both conditions, so they are secondary external data.

Question 33Management information

A data entry control in a payroll system rejects any employee age that is entered as less than 16 or more than 70. This control is:

  1. a data verification
  2. a check digit
  3. a range check Correct answer.
  4. a batch total

Explanation

A range check is a validation test that confirms input falls within stated acceptable limits. Here the limits of 16 and 70 define the permitted range, so any figure outside them is rejected.

Question 34Management information

Which type of information system is designed to support a manager dealing with a semi-structured problem by combining data, models and the manager's own judgement?

  1. a decision support system Correct answer.
  2. a point-of-sale system
  3. an office automation system
  4. a transaction processing system

Explanation

A decision support system brings together data, analytical models and an interactive interface so that a manager can explore alternatives for a problem that is only partly structured. The judgement of the manager remains part of the process, unlike a system that simply records or summarises transactions.

Question 35Management information

A retailer uses five years of past sales data, together with weather records, to estimate the likely demand for each product next summer. This is an example of:

  1. diagnostic analytics
  2. descriptive analytics
  3. prescriptive analytics
  4. predictive analytics Correct answer.

Explanation

Predictive analytics uses historical data and statistical or machine-learning models to estimate what is likely to happen in the future. Estimating next summer's demand from past sales and weather patterns is a forecast of future values, not a summary of the past or a recommendation about what to do.

Question 36Management information

A large central store of data copied from many operational systems, kept separate from those systems and used mainly for analysis and reporting, is called:

  1. a data warehouse Correct answer.
  2. a transaction file
  3. a spreadsheet model
  4. an operational database

Explanation

A data warehouse draws data from several operational systems, holds it in a consistent form and supports querying and analysis rather than day-to-day processing. Keeping the analysis away from the live systems protects their performance and allows historical data to be retained.

Question 37Management information

In a sales invoicing system, which of the following is master (standing) data rather than transaction data?

  1. The payment received from customer 4471 last week
  2. The value of the invoice raised on customer account 4471 yesterday
  3. The credit limit held on customer 4471's account record Correct answer.
  4. The number of invoices printed in today's batch

Explanation

Master data are relatively permanent reference data that are used again and again by many transactions, such as a customer's credit limit, address or price list. Transaction data record individual events such as invoices, payments and batch counts, and they change with every event.

Question 38Management information

Improving the accuracy of a sales forecast from plus or minus 10% to plus or minus 1% would cost an extra $60,000. The only decision affected is worth $50,000 to the company and would not change unless the error exceeded 15%. What should the company do?

  1. Abandon forecasting altogether, because the decision is worth less than the cost
  2. Keep the existing forecast, since the extra cost exceeds the benefit Correct answer.
  3. Buy the extra accuracy, because the cost is a fixed cost of the information system
  4. Buy the extra accuracy, because more accurate information is always preferable

Explanation

Information is worth producing only where the improvement in the decisions it supports exceeds the cost of producing it. The existing error of plus or minus 10% is already within the 15% tolerance, so the decision would not change and the additional $60,000 would buy no benefit.

Question 39Management information

Which characteristic is typical of a transaction processing system?

  1. It supports long-term planning using external data
  2. It provides summarised reports for senior management
  3. It applies expert rules to recommend a course of action
  4. It records high volumes of routine daily transactions Correct answer.

Explanation

A transaction processing system captures and stores the detailed records of routine operations, such as sales, payments and stock movements, and it must cope with high volumes reliably. Summarising for managers, applying expert rules and supporting long-term planning are functions of other types of system.

Question 40Management information

Analytics that recommend the best course of action among the available alternatives, such as identifying the optimal delivery route, are described as:

  1. diagnostic analytics
  2. prescriptive analytics Correct answer.
  3. descriptive analytics
  4. predictive analytics

Explanation

Prescriptive analytics goes beyond explaining or forecasting to recommend the action that best meets a defined objective, often using optimisation or simulation models. Selecting the optimal delivery route from many possible routes is a recommendation about what should be done.

Question 41Cost and management accounting techniques

Which group of costs makes up prime cost?

  1. Direct materials, direct labour and production overhead
  2. Direct materials, direct labour and direct expenses Correct answer.
  3. Direct materials, production overhead and direct expenses
  4. Direct labour, production overhead and direct expenses

Explanation

Prime cost is the total of all direct costs: direct materials, direct labour and direct expenses. Production overhead is an indirect cost and is added to prime cost to arrive at production cost, not included within it.

Question 42Cost and management accounting techniques

Which of the following is a production overhead cost for a furniture manufacturer?

  1. Wood used in making tables
  2. Wages of assembly workers paid per table
  3. Depreciation of factory machinery Correct answer.
  4. Royalty paid for each table produced

Explanation

Production overhead covers indirect costs of running the production facility that cannot be traced to individual units. Machinery depreciation is incurred for the factory as a whole and is therefore a production overhead.

Question 43Cost and management accounting techniques

Which term describes a cost that stays constant in total within the relevant range but falls per unit as output rises?

  1. Fixed cost Correct answer.
  2. Variable cost
  3. Semi-variable cost
  4. Stepped fixed cost

Explanation

A fixed cost is unaffected in total by changes in activity within the relevant range, so spreading it over more units reduces the cost per unit. Variable costs change in total with activity but are constant per unit.

Question 44Cost and management accounting techniques

At an activity level of 10,000 units total cost is $50,000; at 15,000 units total cost is $65,000. Using the high-low method, the variable cost per unit is:

  1. $4.33
  2. $5.00
  3. $2.00
  4. $3.00 Correct answer.

Explanation

The high-low method divides the change in total cost by the change in activity: ($65,000 - $50,000) / (15,000 - 10,000) = $15,000 / 5,000 = $3.00 per unit.

Question 45Cost and management accounting techniques

Budgeted production overhead is $240,000 and budgeted machine hours are 30,000. The predetermined overhead absorption rate per machine hour is:

  1. $0.13
  2. $12.00
  3. $6.00
  4. $8.00 Correct answer.

Explanation

The absorption rate is budgeted overhead divided by budgeted activity: $240,000 / 30,000 machine hours = $8.00 per machine hour. This rate is then applied to actual machine hours worked.

Question 46Cost and management accounting techniques

Contribution per unit is calculated as:

  1. Selling price less total cost per unit
  2. Selling price less variable cost per unit Correct answer.
  3. Selling price less fixed cost per unit
  4. Sales revenue less total fixed costs

Explanation

Contribution is the amount each unit earns towards covering fixed costs and then generating profit, so it is selling price per unit minus variable cost per unit. Total contribution less fixed costs gives profit.

Question 47Cost and management accounting techniques

In a process account, normal loss is valued at:

  1. Its scrap value Correct answer.
  2. The full cost of the input
  3. Zero in all cases
  4. The selling price of finished output

Explanation

Normal loss is expected and unavoidable, so it carries no share of process cost; it is recorded at its scrap or realisable value. That scrap value is deducted from process costs before dividing by expected good output.

Question 48Cost and management accounting techniques

In activity-based costing, the most appropriate cost driver for machine set-up costs is:

  1. Direct labour hours worked
  2. Number of production runs Correct answer.
  3. Number of units produced
  4. Machine hours operated

Explanation

Set-up costs are caused by the need to prepare machines for each production run, so the number of runs (or set-ups) drives the cost. Units produced, labour hours or machine hours do not reflect how often machines must be reset.

Question 49Cost and management accounting techniques

At 8,000 units total cost is $46,000 and at 5,000 units total cost is $34,000. Using the high-low method, the total fixed cost is:

  1. $14,000 Correct answer.
  2. $20,000
  3. $10,000
  4. $6,000

Explanation

The variable rate is ($46,000 - $34,000) / (8,000 - 5,000) = $4 per unit. Fixed cost is then $46,000 - (8,000 x $4) = $14,000, which is confirmed by $34,000 - (5,000 x $4).

Question 50Cost and management accounting techniques

Budgeted overhead is $150,000 for 25,000 labour hours. Actual labour hours were 26,000 and actual overhead was $154,000. Overhead was:

  1. over-absorbed by $2,000 Correct answer.
  2. under-absorbed by $4,000
  3. under-absorbed by $2,000
  4. over-absorbed by $4,000

Explanation

The absorption rate is $150,000 / 25,000 = $6 per hour, so absorbed overhead is 26,000 x $6 = $156,000. Actual overhead of $154,000 is lower than absorbed, giving over-absorption of $2,000.