The CMA exam, as you are aware, is divided into two sections. Each section is designed to assess your knowledge and understanding of essential management accounting competencies. You may also be aware that many people struggle to pass the CMA exam. In fact, candidates have historically struggled the most with Part 1, with CMA pass rates as low as 45% in recent years. This could be due to CMA accounting applicants not fully understanding what is expected of them in each section of the exam. I'll be breaking down everything you need to know about CMA Exam Part 1 and Part 2 to help you prepare like a champ.

CMA Part 1 Skill Requirements

Content Specification Outlines (CSOs) are created by the Institute of Certified Management Accountants to outline the areas on which applicants will be assessed. Each subject is assigned a "level," either A, B, or C. These levels denote the extent to which each topic is intended to be covered. Level A, for example, demands knowledge and comprehension. Knowledge, comprehension, application, and analysis are all required at Level B. Level C necessitates the following six skill levels: information, interpretation, application, assessment, integration, and evaluation.

What exactly do these abilities necessitate of you?

Knowledge: The ability to recollect previously learned things.
Understanding: The ability to interpret and explain material.
Application: The ability to illustrate the use of content in a context.
Analysis: The ability to disassemble material or recognise links between components in order to discover key elements.
Synthesis: The ability to generate hypotheses from various elements of a material in order to develop new activities.
Evaluation: The ability to criticise, justify, and draw judgments about content.

Syllabus for the CMA Exam Part 1.

Financial Planning, Performance, and Analytics are covered in Part 1 of the CMA certification exam.
This four-hour exam includes 100 multiple-choice questions and two essay questions. Because each topic requires you to provide written and quantitative solutions, I prefer to refer to these essays as "scenarios."
CMA Part 1 covers the following six topics:

  • Decisions on External Financial Reporting 15%
  • Planning, budgeting, and forecasting 20%
  • Performance management 20%
  • Cost management 15%
  • Internal controls 15%
  • Technology and Analytics 15%

  • Now that you know what topics will be discussed, let's get a little more specific about what you need to know.

  • External Financial Reporting

  • Financial Statements, as well as Recognition, Measurement, Valuation, and Disclosure, will account for 15% of the exam material.
    You should be comfortable with the following financial statements:

  • Balance sheets
  • Statements of income
  • Statement of Equity Changes
  • Cash Flow Statement.

  • You must comprehend the following concepts for Recognition, Measurement, Valuation, and Disclosure:
  • Asset appraisal.
  • Liability valuation
  • Transactions involving equity.
  • Recognizing Revenue
  • Income Calculation.
  • Substantial variations between US GAAP and IFRS.

  • Budgeting, planning, and forecasting

  • This portion accounts for 20% of CMA Part 1 and covers six competency categories.
    1. Strategic planning development.
    You will need to grasp everything that goes into strategic planning in this part, such as:
  • Evaluation of external and internal data
  • Long-term mission and objectives
  • Tactics must be in sync with long-term strategic aims.

  • 2. Budgeting Ideas
  • Budgeting concepts, as opposed to budgeting procedures, include:
  • Goals for operations and performance objectives
  • Characteristics of an effective budgeting process
  • Allocation of resources

  • 3. Forecasting methods
    To tackle this section, make sure you brush up on the following:
  • Analysis of regression.
  • Analysis of the Learning Curve
  • Expected face value.

  • Management of Performance.

  • This part, which accounts for 20% of your Part 1 exam, includes three major topics.
    Cost and variation measurements
  • Actual versus projected results comparison
  • Flexible budgets are used to evaluate performance.
  • Exceptional management.
  • Utilization of standard cost systems.
  • Analysis of deviations from standard cost predictions.

  • Reporting Centers
  • Different types of responsibility centres
  • Pricing for transfer.

  • Organizational segment reporting
  • Performance Metrics
  • Analysis of product profitability
  • Profitability analysis of business units
  • Analysis of customer profitability
  • ROI (return on investment)
  • Income from residuals.
  • Problems with the investment base
  • Indicators of key performance (KPIs).

  • To ace this section, you should understand the advantages and disadvantages of actual vs. planned results, how to measure performance using flexible budgets, and how to analyse cost estimates. You will also need to understand the various types of responsibility centres and how to measure profitability and return on investment using key performance indicators.

  • Cost Control

  • You must be able to execute calculations linked to various costing approaches for 15% of the grade.
    The following are the key topics covered:
    Concepts of measurement
  • Cost objects and cost behaviour
  • Actual and typical costs
  • Standard prices.
  • Costing of absorption (complete).
  • Costing that is variable (direct).
  • Costing of joint and by-products

  • Costing Methodologies.
  • Work order
  • Activity-oriented process
  • Life-cycle.

  • Overhead expenses
  • Overhead expenses might be fixed or fluctuating.
  • Plant-wide versus departmental overhead
  • Determination of the allocation base.
  • Cost allocation for the service department.

  • Supply Chain Administration.
  • Techniques for efficient resource management.
  • ERP stands for Enterprise Resource Planning.
  • Constraint theory.
  • Management and analysis of capacity.

  • Internal Control Management.

  • This part can be challenging because the topics discussed are primarily conceptual. When there are multiple correct answers, candidates may struggle to select the proper one. Worth 15% of the exam, pay attention to the following topics when preparing to ensure you understand them.
    Governance, Risk Management, and Compliance
    This topic involves risk management and procedures for internal assurances, as well as external audit standards and corporate governance. Notably:
  • Management philosophy and internal control structure
  • Internal control strategies for protection and assurance
  • Internal control threat.
  • Corporate management.
  • External auditing requirements

  • System controls and security safeguards
    This section covers everything from network management to backup controls and business continuity planning. Here is the whole list:
  • Controls for the general accounting system.
  • Controls for application and transactions.
  • Controls for the network.
  • Controls for backup.
  • Planning for business continuity.

  • Analytics and technology

  • CMA Part 1's final 15% includes information systems, data governance, technology-enabled finance transformation, and data analytics. The emphasis is clearly on analytics and how accounting technology plays a role in it, so make sure you understand accounting information systems, data policies and procedures, process automation and applications, and business intelligence.

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