the topics of each CMA Part 1 content area.
A. External Financial Reporting Decisions
- Financial statements
- a. Balance sheet
- b. Income statement
- c. Statement of changes in equity
- d. Statement of cash flows
- e. Integrated reporting
- 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
- 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
- Budgeting concepts
- a. Operations and performance goals
- b. Characteristics of a successful budget process
- c. Resource allocation
- d. Other budgeting concepts
- Forecasting techniques
- a. Regression analysis
- b. Learning curve analysis
- c. Expected value
- 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
- Annual profit plan and supporting schedules
- a. Operational budgets
- b. Financial budgets
- c. Capital budgets
- 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
- 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
- Responsibility centers and reporting segments
- a. Types of responsibility centers
- b. Transfer pricing
- c. Reporting of organizational segments
- 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
- 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
- Costing systems
- a. Job order costing
- b. Process costing
- c. Activity-based costing
- d. Life-cycle costing
- 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
- Supply chain management
- a. Lean resource management techniques
- b. Enterprise resource planning (ERP)
- c. Theory of Constraints
- d. Capacity management and analysis
- 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
- 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
- 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
- Information systems
- a. Accounting information systems
- b. Enterprise resource planning systems
- c. Enterprise performance management systems
- Data governance
- a. Data policies and procedures
- b. Life cycle of data
- c. Controls against security breaches
- Technology-enabled finance transformation
- a. System development life cycle
- b. Process automation
- c. Innovative applications
- 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.