In order to become a CMA in the US, you have to go through the CMA entrance exam. What exactly does it cover? Is it very difficult? Let’s take a look.
CMA Entrance Exam: The Format
The exam is 100% computerized with 100 multiple choice questions and two 30-minute essay questions. It consists of the following parts:
- Financial Planning, Performance and Control
- Financial Decision Making
Candidates are free to take either one or both parts of the exam within the same test windows. The exams have to be completed within 3 years, counting from the date the candidates pay the entrance fee.
New CMA Exam Format Effective 2015
This page is now updated with the latest syllabus. The 3 major changes are:
- Additional content related to external financial reporting in Part 1
- A new section on strategic planning included in Planning, budgeting and forecasting in Part 1
- Professional ethics now tested only in Part 2
CMA Exam Part 1
CMA Exam Part 2
- Financial statement analysis (25%)
- Corporate finance (20%)
- Decision analysis (20%)
- Risk management (10%)
- Investment decisions (15%)
- Professional ethics (10%)
More Information On Each Topic
CMA Exam Part 1
External Financial Reporting Decision
- New to the CMA exam covering basis of financial accounting.
- Preparation of financial statements.
- Valuation of assets and liabilities.
- Operating and capital leases.
- Impact of equity transactions.
- Revenue recognition; income measurement; major differences between U.S. GAAP and IFRS.
Planning, budgeting, and forecasting
- How to annual profit plans and supporting schedules.
- Different types of budget e.g. activity-based budgeting, project budgeting and flexible budgeting.
- Top-level planning and analysis.
- Forecasting including quantitative methods e.g. regression analysis and learning curves.
- How to analyze the finance statement items such as revenue, cost, profit and investment in assets.
- Variance analysis based on flexible budgets and standard costs.
- Responsibility accounting for revenue, cost, contribution and profit centers.
- Balanced scorecards
- Cost concepts, flows and terminology.
- Alternative cost objectives.
- Cost measurement concepts.
- Cost accumulation system e.g. job order costing, process costing, activity-based costing.
- Overhead cost allocation.
- Operational efficiency and business process performance topics e.g. JIT, MRP, theory of constraints, value chain analysis, benchmarking, ABM and continuous improvement.
- Risk assessment
- Internal control environment, procedures and standards.
- Responsibility and authority of internal auditing.
- Types of audits.
- Assessing the adequacy of accounting information systems control.
CMA Exam Part 2
Financial Statement Analysis
- Principal financial statements and their uses.
- Limitation of financial statement information.
- Interpretation and analysis of financial statement e.g. ratio and comparative analyses.
- Market value vs book value.
- Fair value accounting.
- Major difference between IFRS and US GAAP.
- Off-balance sheet financing.
- Cash-flow statement preparation, analysis and reconciliation.
- Earnings quality.
- Types of risk.
- Measures of risk.
- Portfolio management.
- Options and futures.
- Capital instruments for long-term financing.
- Dividend policy.
- Factors influencing the optimal capital structure.
- Cost of capital.
- Managing and financing working capital.
- Mergers and acquisitions.
- International finance.
- Relevant data concepts.
- Cost-volume-profit analysis.
- Marginal analysis.
- Make vs buy decisions.
- Income tax implications for operational decision analysis.
- Operational risk, Hazard risk and financial risk and strategic risk.
- Cash flow estimates.
- Concepts of DCF (discounted cash flow), net present value, IRR (internal rate of return).
- Non-discounting analysis techniques.
- Income tax implications for investment decisions.
- Ranking investment projects.
- Risk analysis.
- Real options.
- Valuation models.
- Ethical consideration for both management accountants and the organization.
For Your Further Reading
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Source: CMA Handbook