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CMA Exam Part 1: Certified Management Accountant Exam Part

cma exam part 1

The Certified Management Accountant (CMA) exam has 2 parts, each focusing on a different set of topics. Together, Part 1 and Part 2 serve as an objective measure of your knowledge and competence in the field of management accounting. You must dedicate your studies to getting very familiar with each part, so let’s start by introducing you to CMA exam Part 1.

CMA Part 1 Syllabus

CMA Part 1: Financial Planning, Performance, and Analytics

Content Area Coverage Percentage Coverage Level
A. External Financial Reporting and Decisions 15% Level C
B. Planning, Budgeting, and Forecasting 20% Level C
C. Performance Management 20% Level C
D. Cost Management 15% Level C
E. Internal Controls 15% Level C
E. Technology and Analytics 15% Level C

As you can see in this table, Part 1 of the CMA exam is called Financial Reporting, Planning, Performance, and Control, and it addresses five content areas.

The Institute of Certified Management Accountants (ICMA) creates the CMA exam and shares the body of knowledge each exam part will cover in the content specification outlines (CSOs). The ICMA uses the CSOs to

  • Lay the foundation for the development of each exam part,
  • Ensure each part has consistent coverage,
  • Communicate the details of the exam content to interested parties,
  • Help candidates prepare for the exam, and
  • Equip review providers with information for their courses.

The CSOs put a coverage percentage next to each exam part topic in order to represent its relative weight. Additionally, the CSOs assign a coverage level to each exam topic. The coverage levels range from an introductory knowledge of the subject matter to a thorough understanding. The ICMA defines the three levels of coverage as:

  1. A: Requiring the skill levels of knowledge and comprehension.
  2. B: Requiring the skill levels of knowledge, comprehension, application, and analysis.
  3. C: Requiring the skill levels of knowledge, comprehension, application, analysis, synthesis, and evaluation.

The coverage levels build on each other, so Level C may contain the requirements of Level A and Level B.

The CSOs don’t tell you the order or the frequency of the topics on the exam.

Topics of CMA Part 1

Part 1 is all about financial reporting, planning, performance, and internal control. If you took the CPA Exam, then Part 1 will feel like an intro to FAR, a bit of AUD in terms of internal control, and a big, more in-depth version of BEC.

In the CMA Handbook, the Institute of Management Accountants (IMA), the worldwide association of accountants and financial professionals in business that offers the CMA certification, summarizes the topics of each CMA Part 1 content area.

A. External Financial Reporting Decisions

  1. Financial statements
    • a. Balance sheet
    • b. Income statement
    • c. Statement of changes in equity
    • d. Statement of cash flows
    • e. Integrated reporting
  2. Recognition, measurement, valuation, and disclosure
    • a. Asset valuation
    • b. Valuation of liabilities
    • c. Equity transactions
    • d. Revenue recognition
    • e. Income measurement
    • f. Major differences between U.S. GAAP and IFRS

In this section, you’ll be required to know the items in these documents and how they relate to each other:

  • A balance sheet
  • An income statement
  • A statement of changes in equity
  • A statement of cash flows

If you have studied any accounting before, this should be a relatively straightforward section, and most of these questions should be computational.

B. Planning, Budgeting, and Forecasting

  1. Strategic planning
    • a. Analysis of external and internal factors affecting strategy
    • b. Long-term mission and goals
    • c. Alignment of tactics with long-term strategic goals
    • d. Strategic planning models and analytical techniques
    • e. Characteristics of a successful strategic planning process
  2. Budgeting concepts
    • a. Operations and performance goals
    • b. Characteristics of a successful budget process
    • c. Resource allocation
    • d. Other budgeting concepts
  3. Forecasting techniques
    • a. Regression analysis
    • b. Learning curve analysis
    • c. Expected value
  4. Budgeting methodologies
    • a. Annual business plans (master budgets)
    • b. Project budgeting
    • c. Activity-based budgeting
    • d. Zero-based budgeting
    • e. Continuous (rolling) budgets
    • f. Flexible budgeting
  5. Annual profit plan and supporting schedules
    • a. Operational budgets
    • b. Financial budgets
    • c. Capital budgets
  6. Top-level planning and analysis
    • a. Pro forma income
    • b. Financial statement projections
    • c. Cash flow projections

Budgeting is the biggest section of Part 1. You’ll be expected to calculate various items such as the cost of goods sold, cost of goods manufactured, and other items in the budget. You’ll also see some conceptual questions such as the definition of budgeting. The coverage of section B is more in-depth than that of section A. The concepts are not difficult, but questions can get lengthy and complex in some budgeting scenarios.

C. Performance Management

  1. Cost and variance measures
    • a. Comparison of actual to planned results
    • b. Use of flexible budgets to analyze performance
    • c. Management by exception
    • d. Use of standard cost systems
    • e. Analysis of variation from standard cost expectations
  2. Responsibility centers and reporting segments
    • a. Types of responsibility centers
    • b. Transfer pricing
    • c. Reporting of organizational segments
  3. Performance measures
    • a. Product profitability analysis
    • b. Business unit profitability analysis
    • c. Customer profitability analysis
    • d. Return on investment
    • e. Residual income
    • f. Investment base issues
    • g. Key performance indicators (KPIs)
    • h. Balanced scorecard

In this section, candidates are tested on the ways performance is evaluated in a corporation. Most of the evaluation tools should be familiar to those who work in the accounting department of a corporation. There are certain elements, such as standard costs, that are used mostly in manufacturing companies as opposed to service-oriented companies. If you are working in a financial institution or other service companies, you may want to spend more time understanding the standard cost concept.

D. Cost Management

  1. Measurement concepts
    • a. Cost behavior and cost objects
    • b. Actual and normal costs
    • c. Standard costs
    • d. Absorption (full) costing
    • e. Variable (direct) costing
    • f. Joint and by-product costing
  2. Costing systems
    • a. Job order costing
    • b. Process costing
    • c. Activity-based costing
    • d. Life-cycle costing
  3. Overhead costs
    • a. Fixed and variable overhead expenses
    • b. Plant-wide vs. departmental overhead
    • c. Determination of allocation base
    • d. Allocation of service department costs
  4. Supply chain management
    • a. Lean resource management techniques
    • b. Enterprise resource planning (ERP)
    • c. Theory of Constraints
    • d. Capacity management and analysis
  5. Business process improvement
    • a. Value chain analysis
    • b. Value-added concepts
    • c. Process analysis, redesign, and standardization
    • d. Activity-based management
    • e. Continuous improvement concepts
    • f. Best practice analysis
    • g. Cost of quality analysis
    • h. Efficient accounting processes

The focus of this section includes the various costing methodologies, and you are expected to be able to complete a full set of calculations.

E. Internal Controls

  1. Governance, risk, and compliance
    • a. Internal control structure and management philosophy
    • b. Internal control policies for safeguarding and assurance
    • c. Internal control risk
    • d. Corporate governance
    • e. External audit requirements
  2. System controls and security measures
    • a. General accounting system controls
    • b. Application and transaction controls
    • c. Network controls
    • d. Backup controls
    • e. Business continuity planning

The internal control questions in this section are almost all conceptual. They are not difficult to understand, but they can be ambiguous. Picking the best answer can be pretty hard when a few of the answers seem to be somewhat correct. Don’t’ get frustrated if you breeze through this section but discover that you do poorly on the practice questions. It happened to me back then, but things started to click after I stayed focused and reworked the tough questions that I got wrong.

F. Technology and Analytics

  1. Information systems
    • a. Accounting information systems
    • b. Enterprise resource planning systems
    • c. Enterprise performance management systems
  2. Data governance
    • a. Data policies and procedures
    • b. Life cycle of data
    • c. Controls against security breaches
  3. Technology-enabled finance transformation
    • a. System development life cycle
    • b. Process automation
    • c. Innovative applications
  4. Data analytics
    • a. Business intelligence
    • b. Data mining
    • c. Analytic tools
    • d. Data visualization

This section of Part 1 is new, so we have yet to develop a strategy for it. However, as with the other areas of the CMA exam, you may be able to use life experience as the foundation for your knowledge. Yet, you should still study the concepts in your CMA review course to ensure that your knowledge is deep. You don’t want to underestimate any part of the CMA exam.

CMA Exam Part 1 Format

Each part of the CMA exam features 2 types of questions and a specific number of each:

  • 100 Multiple-choice questions (MCQs)
  • 2 Essay questions

You’ll have 4 hours of total testing time for each exam part, divided like this:

  • 3 hours for the MCQs
  • 1 hour for the essays

You must answer at least 50% of the MCQs correctly to be eligible to move on to the essay section. If you are eligible, the exam will present the essays to you after you’ve answered all of the MCQs or after 3 hours have passed, whichever comes first. Once you leave the MCQ section of the exam, you can’t go back: you must remain in the essay section.

In the essay section, you must complete 8-10 written response or calculation questions based on 2 scenarios describing a typical business situation.

CMA Part 1 Questions

On the CMA exam, the MCQs have 3 parts:

  1. The question stem: includes the question, necessary details for answering the question, and sometimes, irrelevant information as well.
  2. The correct answer choice: responds to the question stem better than any of the other answer options.
  3. The 3 distractors: appear to be correct at first glance but are actually incorrect.

Aside from the typical, straightforward MCQ question, there are a few other types of MCQs that you’ll see on each exam part.

  • Negative question stem: includes words like “except,” “not,” “false,” and “least” to demonstrate that the correct answer choice is an exception.
  • Combination of correct answers: asks which of three to four numbered statements are correct by providing answer choices with different combinations of the statement numbers.
  • Multiple variables: presents multiple columns of variables and asks candidates to select the answer choice comprising all the correct variables.

Essay Questions on CMA Part 1

Part 1 of the CMA exam contains 2 essay scenarios to which you must respond by answering about 3-5 questions. The essays may ask you to write a few paragraphs or perform a calculation.

Subject matter experts grade the essays, and they will award partial credit. So, when answering a conceptual essay question, you should write as much as you can about the topic so you can maximize your points. Do the same for computational questions by showing your work, as you can receive points for using the correct formula even if you made a mathematical error, for example.

If you must make a chart or table, keep the formatting simple and focus on organizing the information clearly.

CMA Part 1 Pass Rate

The historical pass rate of CMA Exam Part 1 is around 35%.

CMA Exam Pass Rates

2013* 2014* 2015* 2016* 2017*
Part 1 35% 35% 36% 35% 40%

*The ICMA has adjusted when it releases data. These rates span January through October of their respective years.

CMA exam Part 2 tends to have higher pass rates than Part 1, so Part 1 has a reputation for being more difficult. But with neither part putting up pass rates much higher than 50%, it’s clear that basically, the entire CMA exam is quite challenging.

Passing Score and Grading Process of CMA Part 1

A passing score for either exam part is 360. The CMA exam scores are scaled scores that range from 0 to 500. The ICMA transforms your raw score (the number of questions you got right) to a scaled score so that the scores can be reported with uniformity and consistency, no matter which test form you take.

CMA Grading Process

You won’t receive your CMA Part 1 exam results of pass or fail immediately because the ICMA grades the essays questions offline, and this is a long and laborious process. The ICMA grades all of the CMA exams taken within a testing window at the same time so that the grading is consistent, accurate, and fair. Furthermore, the ICMA performs sample grading first to ensure that they account for every solution. Throughout the grading process, reviewers check the grades. And, after the grading is complete, the reviewers conduct an additional review of exams that are on the border of passing.

To calculate your final score, the ICMA adds the score of the MCQ section to the score of the essay section. Your score for the entire part will be a scaled score reflecting the total weighted score of pass/fail. Your total score determines your pass/fail status: you don’t have to pass both sections.

Exam results are released about 6 weeks from the end of the month in which you tested, and your results will be emailed to you and posted to your online profile. If you failed an exam part, you will receive a Performance Report in an email from Prometric about 14 days after your results are posted to your candidate profile. In your Performance report, you’ll see whether your performance was satisfactory, marginal, or unsatisfactory for each of the key topic areas in the MCQ section. You’ll also see your overall performance on the essays.

CMA Part 1 Study Time

Both Part 1 and Part 2 of the CMA exam are offered at Prometric testing centers around the world during these three testing windows:

  1. January/February
  2. May/June
  3. September/October

Different voices in the CMA exam industry have suggested different amounts of study time for Part 1.

CMA Exam Part 1 Study Time in Hours

IMA Gleim Wiley Hock My Recommendation
Part 1 150-170 120 90 150 80 minimum / 170 maximum

My minimum CMA exam study recommendation for Part 1 is based on the amount of time you will need to complete the following activities in the Gleim CMA Review System specifically:

  • Complete the diagnostic quizzes
  • Read the textbook
  • Answer the True/False questions
  • Watch the Gleim Instruct videos
  • Take the MCQ practice quizzes
  • Complete one practice exam

My maximum recommendation also includes answering all of the practice quizzes in the test bank and reviewing the answer explanations for your incorrect answers.

The amount of time you need to study for the CMA exam depends on how familiar you are with the material when you start your review. However, no matter how much you know when you start, you must plan to put in the necessary amount of review time to reach the cognitive levels at which the exam tests.

If you already feel comfortable with some of the Part 1 topics, you might be able to base your study schedule off the minimum amount of time I recommend. If most of the CMA exam material seems foreign to you, you may want to assume that you will need the maximum amount of study time I suggest. Here’s how many weeks and hours per week you would need to study to reach these study time marks:

CMA Exam Part 1 Study Schedule

Total Hours Number of Weeks Hours Per Week Hours Per Day
Minimum 80 8 10 ~ 1 ½
Maximum 170 12 14 2

Study Plan for CMA Exam Part 1

Take these steps to make your CMA Part 1 study plan:

  • Identify the number of study hours you have available each week by evaluating your current weekly schedule.
    • Create a general timeline of your week that includes all the activities you do and how much time each one takes.
    • Total the number of free hours you have to see if it is enough to accommodate your CMA exam studies.
    • If you need more study time, determine which activities you can remove or reduce for a temporary period until you pass the CMA exam.
  • Plan to study for 1-2 hours a day.
    • Complete a few short study sessions or one longer study session a day.
    • Study at the time that is most convenient for your mind and body (when you feel awake, alert, and comfortable).
    • Use your study planner to stay on track.
  • Schedule your exam date.
    • Once you know how many weeks you will need to be completely prepared, you can check the calendar to see what CMA testing window you plan to test in.
    • Contact Prometric (either via their 800 number or website) as soon as possible to secure your preferred test date.
    • Have 2 or 3 equally ideal test dates in mind in case one of your preferred dates is not available.

CMA Part 1 Practice Questions

You can gain access to free CMA Part 1 practice questions in a number of places.

  • Free CMA Exam Questions from Gleim
  • Free CMA Exam Review Pop Quiz from Wiley

You can also access my FREE CMA mini-course to start your CMA exam preparations.

CMA Part 1 Content Overlap with Other Professional Exams

For those of you who are deciding between different qualifications or want to leverage the knowledge you gained from a professional exam you just took, I have good news.

There is quite a bit of content overlap among the CMA exam and the following accounting and finance exams:

CFA

The biggest section in CFA Level 1, the Financial Reporting and Analysis (FRA), is essentially the same as Section A of the CMA Part 1 exam. While the knowledge base is the same, the focus is slightly different: the CFA approaches the material from a more analytical perspective, while CMA comes at it from more of a reporting perspective. 

CPA

Section A of the CMA Part 1 exam is the lite version of Financial Accounting and Reporting (FAR) in the CPA Exam. In other words, if you passed FAR, you shouldn’t have any issues with this part of the exam.

A big part of Section E on Internal Control overlaps with the Auditing and Attestation (AUD) section of the CPA Exam. Section E primarily covers the role of internal control within the company, while AUD concentrates more on the external auditor’s perspective.

The Business Environment and Concepts (BEC) section of the CPA Exam also covers some elements of Section B, C, and D in the CMA exam. In this case, the CMA exam is more in-depth, but you will encounter similar questions on strategic planning and cost accounting in BEC.

CIA

The Internal Control section shares the same fundamental concepts of the internal audit exam. The CIA exam goes a lot deeper in its own niche, but these 2 exams share a lot of content and even have a similar style of questions (more conceptual and not very clear cut).

How to Pass CMA Exam Part 1

There aren’t many things to memorize for CMA Exam Part 1, but you do need to have a clear grasp of the concepts and be able to distinguish the subtle differences between them.

As you answer CMA practice questions, you’ll see that some of them are very lengthy, but don’t get frustrated. Just take the time to complete the calculations. If you are running out of time, mark the long questions and work on the short ones first.

I suggest you read the questions slowly and get familiar with how the questions are presented. Once you’re used to the format and the type of calculations you must perform, your rate of accuracy with the questions will go up dramatically.

If you work on the practice questions, understand the underlying concepts, and rework the questions you got wrong, your chance of success will be very high. Best of luck on your exam!

More Help for the CMA Exam

When you learn and apply all this information about CMA exam Part 1, you’re well on your way to passing. However, to give yourself the best chance at CMA exam success, you should also invest in the best CMA review course for you. My comparison of the most popular CMA review courses will help you make your decision. Then, you can use my CMA review discounts to save big on your preferred CMA exam prep.

You can also learn all about the CMA process and how to pass each part on your first attempt in my free CMA e-course. Learn more or sign up below!

​Get Free CMA Information!

Next Step: Check out CMA Exam Part 2

About the Author Stephanie Ng

I am the author of How to Pass The CPA Exam (published by Wiley) and the publisher of this and several accounting professional exam prep sites.

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