cma gliem success

CMA REVIEWA SYSTEM FOR SUCCESS

Fifteenth EditionTABLE OF CONTENTS

Page

Study Unit 1. The CMA Examination: An Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Study Unit 2. ICMA Content Specification Outline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Study Unit 3. Exam Preparation, Administration, and Grading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Study Unit 4. Multiple-Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Study Unit 5. Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Study Unit 6. Preparing to Pass the CMA Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Study Unit 7. How to Take the CMA Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Order Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

This booklet’s purpose is to help you develop and implement a SYSTEM FOR SUCCESSfor passing the CMA exam, which includes

1. Understanding the CMA exam process, including the purposeof the exam, subject matter coverage, preparation, format,administration, grading, and pass rates

2. Learning and understanding the subject matter tested3. Perfecting your question-answering techniques by

answering questions under exam conditions4. Planning and practicing exam execution5. Developing the confidence you need to succeed

Each of these five steps is discussed and illustrated on the following pages.Gleim removes the “mystique” of the CMA exam by providing you with the answers,information, and tools you need to arrive at the test center with a head start, plus theconfidence necessary to PASS.

“EXAM SUCCESS GUARANTEED!”

The Gleim CMA Review System GUARANTEES that you will pass each part on the firsttry. The system combines our books, Test Prep Software, Test Prep for Windows Mobile,Audio CDs, Gleim Online, Essay Wizard, and a Personal Counselor to maximize youravailable study time. Because we identify and focus on your weak areas, you will not spendany more time preparing than is necessary to guarantee success.

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Copyright © 2011 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. Duplication prohibited. www.gleim.com

Gleim Publications, Inc.P.O. Box 12848University StationGainesville, Florida 32604(800) 87-GLEIM or (800) 874-5346(352) 375-0772FAX: (352) 375-6940Internet: www.gleim.comEmail: [email protected]

ISBN: 978-1-58194-817-2 CMA Review: Part 1ISBN: 978-1-58194-818-9 CMA Review: Part 2ISBN: 978-1-58194-823-3 CMA System for Success

This is the second printing of the fifteenthedition of CMA Review: A System forSuccess. Please email [email protected] CMA SFS 15-2 included in the subjector text. You will receive our current updateas a reply. Updates are available until thenext edition is published.EXAMPLE:To: [email protected]: your email addressSubject: CMA SFS 15-2

Copyright © 2011 by Gleim Publications, Inc.

First Printing: January 2010Second Printing: March 2011

ALL RIGHTS RESERVED. No part of this material may be reproduced in any form whatsoever withoutexpress written permission from Gleim Publications, Inc.

ACKNOWLEDGMENTS

The authors are indebted to the Institute of Certified Management Accountants (ICMA) forpermission to use problem materials from past CMA examinations. Questions and unofficial answersfrom the Certified Management Accountant Examinations, copyright © 1982 through 2005 by theInstitute of Certified Management Accountants, are reprinted and/or adapted with permission.

REVIEWERS AND CONTRIBUTORS

Garrett W. Gleim, B.S., CPA (not in public practice), University of Pennsylvania, is one of our vicepresidents. Mr. Gleim coordinated the production staff, reviewed the manuscript, and providedproduction assistance throughout the project.

Grady M. Irwin, J.D., is a graduate of the University of Florida College of Law, and he has taught in theUniversity of Florida College of Business. Mr. Irwin provided substantial editorial assistancethroughout the project.

John F. Rebstock, B.S.A., is a graduate of the Fisher School of Accounting at the University of Florida.He has passed the CIA and CPA exams. Mr. Rebstock reviewed portions of the manuscript.

Stewart B. White, B.M., cum laude, University of Richmond, B.S., Virginia Commonwealth University,has passed the CPA and CISA exams and has worked in the fields of retail management, financialaudit, IT audit, COBOL programming, and data warehouse management. He extensively revisedportions of this manuscript.

A PERSONAL THANKS

This manual would not have been possible without the extraordinary effort and dedication of JacobBrunny, Julie Cutlip, Eileen Nickl, Teresa Soard, Joanne Strong, and Candace Van Doren, who typedthe entire manuscript and all revisions and laid out the diagrams and illustrations in this booklet. Wealso appreciate the production and editorial assistance of Ellen Buhl, Katie Gallagher, James Harvin,Katie Larson, Jean Marzullo, Shane Rapp, Kristin Walls, Katie Wassink, and Martha Willis.

Finally, we appreciate the encouragement, support, and tolerance of our families throughout thisproject.

This publication is designed to provide accurate and authoritative information with regard to the subject matter covered. It issold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service.

If legal advice or other expert assistance is required, the services of a competent professional person should be sought.

(From a declaration of principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.)

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KEEPING OUR CMA BOOKS/TEST PREP SOFTWARE/AUDIOS/GLEIM ONLINE UP-TO-DATE!

If you use the Gleim materials, we want YOUR feedback immediately after the exam and as soonas you have received your grades. The CMA exam is NONDISCLOSED, and you will sign anattestation including, “I hereby attest that I will not divulge the content of this examination...” We askonly for information about our materials, i.e., the topics that need to be added, expanded, etc. Ourapproach has ICMA approval.

Please help us by completing and sending us the form at the back of each Gleim book immediatelyafter you take the CMA exam. DO NOT discuss individual CMA questions with us or anyone else, evenother CMA candidates. Thank you for maintaining the integrity of the nondisclosed CMA exam andcontributing to the continued high quality of Gleim CMA Review materials.

EMAIL UPDATE SERVICE

We strive to keep our review materials as current and accurate as possible. Most CMA candidateshave access to email or the Internet. Accordingly, we provide an automatic update service that you canaccess by emailing [email protected] with your book acronym (see below) followed by the edition/printing number in the subject line (see page ii). For example, if you have the first printing of the15th edition, type the following in the subject line:

BookFinancial Planning, Performance, and Control CMA 1 15-1Financial Decision Making CMA 2 15-1

To update your Test Prep, use the Online Updates system through your Test Prep Software.

Additionally, the same information is available at www.gleim.com. Our updates will includerevisions to exam policies and procedures by the ICMA, new pronouncements that are testable on theupcoming exams, and other valuable information. Updates are available until the next edition ispublished.

THE OTHER GLEIM CMA MATERIALS

To pass the CMA exam, you should carefully read Study Units 1 through 7 in this booklet. Thencomplete each study unit consecutively by using the combination of our books, Test Prep Software,Test Prep for Windows Mobile, Audio CDs, Gleim Online, and Essay Wizard. This system allows busyCMA candidates to optimize their limited time through intensive review of all available materials.

The CMA Gleim Online provides a structured, step-by-step study program that will identifycandidates’ weaker areas. A Personal Counselor is also provided to ensure each candidate has thecompetitive edge. The Essay Wizard provides additional online essay questions for extra practice.

The CMA Test Prep Software and Test Prep for Windows Mobile contain thousands of multiple-choice questions, allowing candidates to create customized tests specifically for their weaker areas.

The CMA Review books provide candidates with the ability to study at any time. Each bookcorresponds to the other review materials and contains Knowledge Transfer Outlines, multiple-choicequestions and explanations, and essay questions and explanations.

The CMA Review Audio CDs will assist candidates in turning non-traditional study time intovaluable review. The audios are ideal while commuting, exercising, etc.

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USER INQUIRIES (TECHNICAL ASSISTANCE) AND CUSTOMER SERVICE PROCEDURES

Technical questions about our materials should be sent to us via email, fax, or mail. Theappropriate author, consultant, or staff member will give it thorough consideration and a promptresponse.

Questions concerning orders, prices, shipments, or payments will be handled via telephone, email,Internet, fax, or mail by our competent and courteous customer service staff.

For Test Prep Software technical support, you may use our automated technical support service atwww.gleim.com/support/, email us at [email protected], or call us at (800) 874-5346.

LISTING OF GLEIM STUDY UNITS

Part 1: Financial Planning, Performance, and Control

1. Budgeting Concepts and Forecasting Techniques2. Budget Methodologies and Budget Preparation3. Cost Management Terminology and Concepts4. Cost Accumulation Systems5. Cost Allocation Techniques6. Operational Efficiency and Business Process Performance7. Cost and Variance Measures8. Responsibility Accounting and Performance Measures9. Internal Controls I

10. Internal Controls II and Ethics for Management Accountants

Part 2: Financial Decision Making

1. Basic Financial Statement Analysis2. Financial Performance Metrics – Financial Ratios3. Profitability Analysis and Analytical Issues4. Investment Risk and Portfolio Management5. Financial Instruments and Cost of Capital6. Managing Current Assets7. Raising Capital, Corporate Restructuring, and International Finance8. Decision Analysis and Risk Management9. Investment Decisions I

10. Investment Decisions II and Ethical Considerations for the Organization

ABOUT THE AUTHORS

Irvin N. Gleim is Professor Emeritus in the Fisher School of Accounting at the University of Floridaand is a member of the American Accounting Association, Academy of Legal Studies in Business,American Institute of Certified Public Accountants, Association of Government Accountants, FloridaInstitute of Certified Public Accountants, The Institute of Internal Auditors, and the Institute ofManagement Accountants. He has had articles published in the Journal of Accountancy, TheAccounting Review, and The American Business Law Journal and is author/coauthor of numerousaccounting and aviation books and CPE courses.

Dale L. Flesher is the Arthur Andersen Alumni Professor in the School of Accountancy at theUniversity of Mississippi and has written over 300 articles for business and professional journals,including Management Accounting, Journal of Accountancy, and The Accounting Review, as well asnumerous books. He is a member of the Institute of Management Accountants, American Institute ofCertified Public Accountants, The Institute of Internal Auditors, American Accounting Association, andAmerican Taxation Association. He is a past editor of The Accounting Historians’ Journal and is atrustee and past president of the Academy of Accounting Historians.

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STUDY UNIT ONE

THE CMA EXAMINATION: AN OVERVIEW

(12 pages of outline)

1.1 Corporate Management Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Purpose of the Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3 Subject Matter Tested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.4 Level of Performance Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.5 Gleim Study Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.6 Who Should Take the CMA Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.7 The Institute of Management Accountants (IMA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.8 The Institute of Certified Management Accountants (ICMA) . . . . . . . . . . . . . . . . . . . . . . . . 61.9 Requirements to Attain the CMA Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.10 Education Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.11 Experience Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71.12 How to (1) Apply for, (2) Register for, and (3) Schedule Your CMA Exam . . . . . . . . . . . . . . 81.13 Maintaining Your CMA Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.14 Steps to Become a CMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.15 Preparing for CMA Exam Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.16 Other CMA Review Materials, Systems, and Courses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.17 How Much Money Should You Spend? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

TRANSITION TO TWO-PART EXAM

The ICMA has changed the CMA program from a four-part to a two-part exam. The new two-partexam became available May 1, 2010. Candidates are now able to enter only into the new two-partprogram.

Candidates for the four-part exam can transition to the new exam. If they passed old Part 2, theyonly have to pass new Part 2 to complete the CMA. If they passed old Part 3, they only have to passnew Part 1 to complete the CMA. If both old Parts 2 and 3 were passed, a 2-hour transition exammust be taken to complete the CMA. Old exam Parts 1, 2, 3, and 4 are no longer available tocomplete.

The purpose of this study unit is to explain the Certified Management Accountant (CMA)examination, including content, when and where to take it, and costs, as well as to give you backgroundinformation about the IMA and the ICMA. Much of this study unit is taken from the CMA Handbook,published by the ICMA and available at www.imanet.org/cma_certification/study_resources.aspx.

The CMA exam is developed and offered by the Institute of Certified Management Accountants(ICMA) in approximately 200 locations in the U.S. and an additional 200 international locations.

1.1 CORPORATE MANAGEMENT ACCOUNTING

1. Objective: Maximize the value of the firm by optimizinga. Long-term investment strategiesb. The capital structure, i.e., how these long-term investments are fundedc. Short-term cash flow management

2. Corporate financial management involves a financial manager, usually a vice-president orchief financial officer, who is assisted by thea. Treasurer -- cash, credit, capital outlay managementb. Controller -- financial, cost, tax accounting

3. All accounting and finance personnel are beneficiaries of CMA participation.

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4. The body of knowledge necessary for proficiency in management accounting is set forth inthe ICMA’s Content Specification Outlines and Learning Outcome Statements for the CMAexaminations.

5. The diagram below illustrates an economic entity combining the factors of production intofinished goods or services (arrows to the right) with money flowing to the left.

6. Put CMA in perspective when considering the production of goods or services in ourcapitalistic society. An entity combines the factors of production into finished goods.a. Note that the CMA program focuses on financial capital and the other factors of

production as well as the finished goods market, while the CEO (chief executiveofficer) has overall responsibility for the entity’s operations.

1.2 PURPOSE OF THE EXAMINATION

The CMA certification program has four objectives:● To establish management accounting as a recognized profession by identifying the role of

the management accountant and financial manager, the underlying body of knowledge, anda course of study by which such knowledge is acquired;

● To encourage higher educational standards in the management accounting field;● To establish an objective measure of an individual’s knowledge and competence in the field

of management accounting; and● To encourage continued professional development by management accountants.

The exam tests the candidates’ knowledge and ability with respect to the current state of the fieldof management accounting.

We have arranged the subject matter tested on the CMA examination into 10 study units for eachpart. Each part is presented in a separate book. Both of these books contain review outlines; priorCMA exam questions, answers, and answer explanations; and essay questions.

CMA Exam

Part 1 2

Formal Title Financial Planning,Performance, and Control

FinancialDecision Making

Exam Length 4 hours 4 hours

No. of Questions

Multiple-Choice 100 100

Essay 2 2

2 SU 1: The CMA Examination: An Overview


1.3 SUBJECT MATTER TESTED

The ICMA has developed Content Speci-fication Outlines (CSOs) and has committed tofollow them on each examination. In additionto the CSOs, the ICMA has published LearningOutcome Statements (LOSs) that specify whatyou should be able to do.

Candidates for the CMA designation areexpected to have a minimum level of businessknowledge that transcends all examinationparts. This minimum level includes knowledgeof basic financial statements, time value ofmoney concepts, and elementary statistics.Specific discussion of the ICMA’s Levels ofPerformance (A, B, and C) is provided on thenext page.

Each Gleim CMA Review study unitbegins with the LOSs from the ICMA, followedby our Knowledge Transfer Outline, CoreConcepts, multiple-choice practice questionsand explanations, and finally essay questions.

The CMA Review study unit titles andorganization differ somewhat from the subtopictitles used by the ICMA in its CSOs (see thetables displayed in Study Unit 2 onpages 15-21). The selection of study units inCMA Review are based on the expected futureexam coverage as defined in both the CSOsand LOSs. Before you study our KnowledgeTransfer Outlines, read the LOSs at thebeginning of each study unit, which will alertyou to what is expected and required of you.

ICMA CSO ExcerptExample: Area A from Financial Planning,

Performance, and ControlA. Planning, Budgeting and Forecasting

(30% - Levels A, B, and C)

1. Budgeting concepts

a. Operations and performance goalsb. Characteristics of a successful

budget processc. Resource allocationd. Other budgeting concepts

2. Forecasting techniques

a. Regression analysisb. Learning curve analysisc. Exponential smoothingd. Time series analysise. Expected value

3. Budgeting methodologies

a. Annual business plans (masterbudgets)

b. Project budgetingc. Activity-based budgetingd. Zero-based budgetinge. Continuous (rolling) budgetsf. Flexible budgeting

4. Annual profit plan and supportingschedules

a. Operational budgetsb. Financial budgetsc. Capital budgets

5. Top-level planning and analysis

a. Pro forma incomeb. Financial statement projectionsc. Cash flow projections

Authors’ note: CMA Review covers all of theCSO topics as they are tested on the CMAexam. When you take the exam, there willbe no surprises.

SU 1: The CMA Examination: An Overview 3


ICMA’S CMA CONTENT SPECIFICATION OUTLINE OVERVIEW


Planning, Budgeting, and Forecasting 30%Performance Management 25%Cost Management 25%Internal Controls 15%Professional Ethics 5%


Financial Statement Analysis 25%Corporate Finance 25%Decision Analysis and Risk Management 25%Investment Decisions 20%Professional Ethics 5%

Each CMA exam part will cover the topics above. For example, Performance Management willconstitute 25% of each Part 1 exam.

1.4 LEVEL OF PERFORMANCE REQUIRED

The ICMA has specified three levels of coverage as reproduced below and indicated in its contentspecification outlines. All topics on the CMA exam are tested up to Skill Level C. The relativeproportions of multiple-choice questions are: Skill Level A - 25%, Skill Level B - 50%, andSkill Level C - 25%.

Authors’ note: Rely on the questions at the end of each study unit in each CMA Review bookand in CMA Test Prep Software, Test Prep for Windows Mobile, and CMA Gleim Online.

Level A: Requiring the skill levels of knowledge and comprehension.Level B: Requiring the skill levels of knowledge, comprehension, application, and analysis.Level C: Requiring all six skill levels: knowledge, comprehension, application, analysis,

synthesis, and evaluation.

See Appendix D of a Part 1 or 2 Gleim CMA Review book for a reprint of the ICMA’s discussion of“Types and Levels of Exam Questions.”

Conceptual vs. Calculation Questions

Some of the CMA test questions will be calculations, in contrast to conceptual questions. TheICMA has approved the use of two calculators (see Study Unit 7, Subunit 10) to assist in this area.Beginning in May of 2011, certain essay questions will include a spreadsheet to assist with calculations,including net present value.

1.5 GLEIM STUDY UNITS

We have divided the overall task of preparing for the CMA exam into 10 study units for each partof the exam. These study units conform to (or parallel) the ICMA CSOs. The average study unit inCMA Review is 50 pages (including CMA questions and Gleim answer explanations and an essayquestion) and can be completed in one study session.

Study Unit 2 in this booklet contains a comprehensive listing of the ICMA CSOs on the left and thecorresponding Gleim study units on the right. Most IMA areas are broken down into more than oneGleim study unit. Each of the Gleim CMA Review books has an ICMA CSO with a correspondingGleim study unit listing for that exam part.



1.6 WHO SHOULD TAKE THE CMA EXAMAll persons who wish to present themselves as management finance and management accounting

professionals should pursue the CMA certification. People who say they are in the field of managementaccounting are often asked, “Are you a CMA?” The IMA gives the following reasons to become a CMA:

Because no other accounting or finance credential lends itself more directly to today’s complexand changing business environment.

Because you will confirm substantial knowledge of accounting, finance, and important relatedfields and demonstrate the ability to integrate this information into the business decision process.

Because you will distinguish yourself as a business professional who is committed to a strictcode of ethics.

Because you will demonstrate your commitment to personal professional development andlifelong learning.

The CMA designation is prestigious, and it is a source of pride to those who have achieved it. Donot delay in taking the CMA exam. You will likely regret throughout your professional career a decisionnot to obtain the CMA designation, even if you are not working in management finance or accounting.

1.7 THE INSTITUTE OF MANAGEMENT ACCOUNTANTS (IMA)Conceived as an educational organization to develop the individual management accountant

professionally and to provide business management with the most advanced techniques andprocedures, the IMA was founded as the National Association of Cost Accountants in 1919 with37 charter members. It grew rapidly, with 2,000 applications for membership in the first year, and todayit is the largest management accounting association in the world, with approximately 60,000 membersand more than 205 chapters in the U.S. and 10 abroad.

The IMA has made major contributions to business management through its continuing educationprogram, with courses and seminars conducted in numerous locations across the country; its twomagazines, Strategic Finance, which is a monthly publication, and Management Accounting Quarterly,which is an online journal; other literature, including research reports, monographs, and books; atechnical inquiry service; a library; the annual international conference; frequent meetings at chapterlevels; and frequent communication through online member interest groups and email exchanges.

Membership in the IMA is open to all persons interested in advancing their knowledge ofaccounting or financial management. It is required for CMA candidates and CMAs. CMAs are alsorequired to pay a $30 CMA maintenance fee each year when they renew their IMA membership.

IMA Membership Fees* CMAThrough

August 31, 2011Beginning

September 1, 2011AnnualFees

Regular $195 $210 $225

Student $ 39 $ 39 $ 69

Young Professional $130 $140 $160

Academic $ 98 $105 $128

* All new members (except Students and Young Professionals) also pay a one-time registration feeof $15.

Apply for IMA membership online at www.imanet.org/ima_membership.aspx. Membershipapplication forms also may be obtained by writing the Institute of Management Accountants,10 Paragon Drive, Suite 1, Montvale, NJ 07645-1760, or calling (201) 573-9000 or (800) 638-4427.



1.8 THE INSTITUTE OF CERTIFIED MANAGEMENT ACCOUNTANTS (ICMA)The ICMA is located at the IMA headquarters in Montvale, New Jersey. The only function of the

ICMA is to offer and administer the CMA designation. The staff consists of the managing director, thedirector of examinations, and support staff. The ICMA occupies about 2,000 square feet of office spacein the IMA headquarters. This office is where new examination questions are prepared and where allrecords are kept.

ICMA Board of Regents StaffThe ICMA Board of Regents is a special committee of the IMA established to direct the CMA

program for management accountants through the ICMA.

The Board of Regents consists of between 12 and 15 Regents, one of whom is designated aschair by the president of the IMA. The regents are appointed by the president of the IMA to serve3-year terms. Membership on the Board of Regents rotates, with one-third of the regents beingappointed each year. The regents usually meet twice a year for 1 or 2 days.

The managing director of the ICMA, the director of examinations, and the ICMA staff are located atthe ICMA office in Montvale, NJ. They undertake all of the day-to-day work with respect to the CMAprogram.

1.9 REQUIREMENTS TO ATTAIN THE CMA DESIGNATIONThe CMA designation is granted only by the ICMA. Candidates must complete the following steps

to become a CMA:

1. Become a member of the IMA [$195 ($210 beginning September 1, 2011) per year forregular membership].

2. Register for the exam and pay the exam entrance fee ($225 for domestic/internationalmembers, $75 for student/academic members).

3. Pass both parts of the exam within 3 years ($350 registration fee per part).

4. Satisfy the education requirement (bachelor’s degree in any area from an accreditedinstitution).

5. Satisfy the experience requirement [2 years (continuous) of professional experience].

6. Comply with the IMA Statement of Ethical Professional Practice.

Upon completion of all requirements, the ICMA will issue a numbered CMA certificate. To keepthe certificate, a CMA must (1) maintain active membership in the IMA, (2) fulfill the requirements forcontinuing professional education, and (3) continue to comply with the IMA Statement of EthicalProfessional Practice.

1.10 EDUCATION REQUIREMENTCandidates seeking admission to the CMA program must hold a bachelor’s degree, in any area,

from an accredited college or university. Degrees from nonaccredited institutions must be evaluated byan independent agency listed at www.aice-eval.org or www.naces.org.

NOTE: Educational credentials must be submitted when applying or within 7 years of passing theexamination. The educational credentials must qualify in order to be certified.



1.11 EXPERIENCE REQUIREMENT

Two continuous years of professional experience in financial management and/or managementaccounting are required any time prior to or within 7 years of passing the examination.

1. Qualifying experience consists of employment in positions that require regularly makingjudgments involving the principles of management accounting and financial management,e.g.,a. Financial analysisb. Budget preparationc. Management information systems analysisd. Financial managemente. Management accountingf. Auditing in government, finance, or industryg. Management consultingh. Auditing in public accountingi. Research, teaching, or consulting related to management accounting (for teaching, a

significant portion required to be above the principles level)2. Employment in functions that require the occasional application of management accounting

principles, but are not essentially management-accounting oriented, will not satisfy therequirement, e.g.,a. Computer operationsb. Sales and marketingc. Manufacturingd. Engineeringe. Human resourcesf. Employment in internships, trainee, clerical, or nontechnical positions

3. Continuous part-time positions of 20 hours per week meeting the definition of qualifiedexperience will count toward the experience requirement at a rate of 1 year of experiencefor every 2 years of part-time employment.

If you have any questions about the acceptability of your work experience or bachelor’s degree,please write or call the ICMA. Include a complete description of your situation. You will receive aresponse from the ICMA as soon as your request is evaluated.

Institute of Certified Management Accountants10 Paragon Drive, Suite 1Montvale, NJ 07645-1760

(201) 573-9000(800) [email protected]



1.12 HOW TO (1) APPLY FOR, (2) REGISTER FOR, AND (3) SCHEDULE YOUR CMA EXAMFirst, you are required to apply both for membership in the IMA and for admission into the

Certification Program.

Apply to join the IMA and the Certification Program today -- it takes only a few minutes.Application to the ICMA requires education, employment, and reference data. The education andexperience requirements are discussed beginning on page 6. You must provide two references ifrequested: one from your employer and the second from someone other than a family member orfellow employee. An official transcript providing proof of graduation is also required after you havecompleted the exams. There is a $225 Certification Entrance Fee ($75 for students and academics),and everyone who enters the certification program receives 6 months’ access to sample questions andanswers and the CMA Assessment Tool. Once a person has become a candidate, (s)he must registerfor an exam part within the first 12 months or repay the entrance fee. Also, there is no participant’s feeother than IMA membership dues unless a candidate does not register for a part within 12 months orcomplete the exam within 3 years, in which case the entrance fee must be paid again to take the exam.

Second, it is necessary to register each time you wish to sit for the exams. The exam registrationform is very simple and takes about 2 minutes to complete. The registration fee for each part of theexam is $350. North American student and academic members, as well as any candidate taking twoparts in one testing window, have a discount price. See the table below for a concise listing of fees. Ifyou register for a specific testing window and fail to take the exam, you must register again and repaythe full registration fee.

Entrance FeeExam Fee

One Part/WindowExam Fee

Both Parts/WindowRegular $225 $350 $300

Student $75 $175 $125

Academic $75 $175 $125

The IMA encourages candidates to view information and complete membership application andexam registration online atwww.imanet.org/cma_certification/exam_procedures_and_registration.aspx. You can also call to ordera registration booklet and IMA application form from the ICMA at (800) 638-4427.

Both Parts 1 and 2 are offered in three testing windows: January/February, May/June, andSeptember/October. Register about 6 weeks before the time you wish to take the exam. Registrationfor Parts 1 and 2 received on or after February 16, June 16, or October 16 will be authorized for anyfuture testing window (i.e., not the current window, but the next window or later). For example, if youregister for a part on February 16, 2011, the earliest you can take the exam is May 1, 2011.Registrations received before those dates will be authorized for any window including the current one.See the table below.

If you register during The earliest you can take yourexam is

October 16-February 15 January/FebruaryFebruary 16-June 15 May/JuneJune 16-October 15 September/October

Finally, once you have received your authorization letter from the ICMA, you will need to schedulean appointment to take the exam with Prometric. The easiest method to schedule your appointment isonline at www.prometric.com/ICMA. This website also provides phone numbers should you wish to callthe appropriate 800 number for your country or local Prometric testing center.



ICMA Refund PolicyIf you have not set an appointment with Prometric, the Exam Fee may be refunded at your request

within 30 days of registration. A $25 processing fee will be subtracted from the refund. TheCertification Entrance Fee is not refundable.

Pass/Fail and Grade ReportsThe essay questions are graded at a later time, so you will not receive immediate pass/fail results.

The scores for the multiple-choice and essay sections are added together for each part for a totalweighted score of pass/fail reflected in a scaled score. The total score determines pass/fail status, socandidates are not required to receive passing scores on both sections. The scores will be mailedapproximately 6 weeks from the end of the month in which you sat for your exam. A performancereport will be provided for the multiple-choice section for those who did not pass the exam. See StudyUnit 3, Subunit 6, for more details on the CMA exam grading process.

If you fail the exam, you may register to take it again as soon as you like. However, you cannottake an exam part more than one time during a testing window.

1.13 MAINTAINING YOUR CMA DESIGNATIONMembership in the IMA is required to maintain your CMA certificate. The annual CMA

maintenance fee for regular members is $30. The CMA Maintenance Fee is payable at the time of aCMA member’s renewal term. The Fee is used by ICMA to promote the CMA program to increasebrand awareness in the marketplace. It also covers the administrative costs of maintaining CMArecords and providing confirmation of one’s CMA credential to employers. See the table of fees inSubunit 1.7 for other levels of membership. There is no additional participant fee.

Continuing professional education is required of CMAs to maintain their proficiency in the field ofmanagement accounting. Beginning the calendar year after successful completion of the CMA exam,30 hours of CPE must be completed, which is about 4 days per year. Qualifying topics includemanagement accounting, corporate taxation, statistics, computer science, systems analysis,management skills, marketing, business law, and insurance.

All CMAs are required to complete a minimum of 2 hours of continuing education on the subject ofethics as part of their 30-hour annual CPE requirement. The focus of the ethics education should beprincipally in the area of management accounting and financial management. Topics should includeethical considerations in the area of decision support, planning, and control for accounting and financeprofessionals working inside organizations. CMAs are encouraged to use education sources thataddress specific scenarios, such as fraud in financial reporting, manipulation of budgets for personalgain, and disclosure of confidential financial information. Also acceptable is coverage of ethics withinthe general business environment.

Credit for hours of study will be given for participation in programs sponsored by businesses,educational institutions, or professional and trade associations at either the national or local level.

Programs conducted by an individual’s employer must provide for an instructor or course leader.There must be formal instructional training material. On-the-job training does not qualify. An affidavitfrom the employer is required to attest to the hours of instruction. The programs may be seminars,workshops, technical meetings, or college courses under the direction of an instructor. The method ofinstruction may include lecture, discussion, case studies, and teaching aids, such as training films andaudios.

Credit for hours of study may be given for technical articles published in business, professional, ortrade journals, and for major technical talks given for the first time before business, professional, ortrade organizations. The specific hours of credit in each case will be determined by the Institute.



1.14 STEPS TO BECOME A CMA

1. Become knowledgeable about the exam, and determine which part you will take first.2. Purchase the Gleim CMA Review System (including books, Test Prep Software, Test Prep

for Windows Mobile, Audio CDs, Gleim Online with your Personal Counselor, and EssayWizard) to thoroughly prepare for the CMA exam. Commit to systematic preparation for theexam as described in our review materials, including this booklet.

3. Communicate with your Personal Counselor to design a study plan that meets your needs.Call (800) 874-5346 or email [email protected].

4. Apply for membership in the IMA and in the certification program. (See Subunit 1.7.)5. Register to take the desired part of the exam using the examination registration form and

send it with your application to the ICMA. See Study Unit 6, Subunit 2, for more informationon when each part of the exam is offered. You will receive authorization to take the examfrom the ICMA and will need to sit for the exam in the appropriate testing window based onwhen you registered as designated by the ICMA (see Subunit 1.12, “How to (1) Apply for,(2) Register for, and (3) Schedule Your CMA Exam”).

6. Schedule your test with Prometric (online, national 800 number, or call your local Prometrictesting site).

7. Work systematically through each study unit in the Gleim CMA Review System.8. Sit for and PASS the CMA exam while you are in control, as described in Study Unit 7 of this

booklet. Gleim Guarantees Success!9. Email, fax, mail, or call Gleim with your comments on our study materials and how well they

prepared you for the exam.10. Enjoy your career, pursue multiple certifications (CIA, CPA, EA, etc.), and recommend Gleim

to others who are also taking these exams. Stay up-to-date on your ContinuingProfessional Education requirements with Gleim CPE.

1.15 PREPARING FOR CMA EXAM SUCCESS

A. The Preparation Process -- In order to be successful on examinations, you need to undertake thefollowing steps:1. Understand the exam, including its purpose, coverage, preparation, format,

administration, and grading and pass rates. The better you understand the examinationprocess from beginning to end, the better you will perform. This booklet, CMA Review:A System for Success, will make you the expert you need to be to pass the CMA exam!

2. Learn and understand the subject matter tested. We have analyzed the ICMA ContentSpecification Outlines as well as CMA exams for over 30 years. We encourage commentsand evaluations of our books after each exam as permitted by ICMA rules, which allows usto confirm that we had 100% coverage of the material tested or to learn what additional orincreased coverage is warranted. As a result of our due diligence, our Knowledge TransferOutlines cover all subject matter tested on the CMA exam. Obtain and study theappropriate parts of the Gleim CMA Review System: Financial Planning, Performance, andControl and Financial Decision Making.

3. Practice answering exam questions to perfect your exam-answering techniques.Answering recent exam questions helps you understand the standards to which you will beheld and helps you learn and understand the material tested.a. Fully commit to the correct answer before glancing at the answer explanation.

Included in each Gleim book are two bookmarks designed to cover the answerexplanations that appear to the right of all questions. Our CMA Test Prep Softwareand Test Prep for Windows Mobile require you to commit to an answer beforeconsulting the discussion and answer explanation.

Our answer explanations are intuitively appealing and easy to use.



b. CMA Test Prep Software and Test Prep for Windows Mobile contain about2,500 questions, including hundreds not found in the books. We recommend that youuse exclusively 20-question tests (in the test mode function). Immediately followingeach 20-question test session, you will be prompted to review the questions youmarked and/or answered incorrectly. For each question, analyze and understandwhy you answered it incorrectly. This step is an essential learning activity. Theobjective is to learn from your mistakes so you avoid them on the actual CMA exam.

4. Plan and practice exam execution. Anticipate the exam environment and prepare yourselfwith a plan that includes the following: When will you arrive? How will you be dressed(e.g., layered clothes)? How much time will you spend on each question? What will youbring?a. Expect the unexpected and adjust! Remember that your sole objective when taking an

examination is to maximize your score. The examination is curved and you mustoutperform your peers. Being as comfortable and relaxed as possible gives you oneadvantage over your peers.

5. Develop confidence and ensure success with a controlled preparation program followed byconfident execution and control during the examination.a. You have already achieved a great deal of confidence, evidenced by your plan to take

the CMA exam.b. The Gleim System for Success will work for you!

B. Control -- You have to be in control to be successful during exam preparation and execution.Control can contribute greatly to your personal and professional goals. See the discussion ofcontrol in Study Unit 6. The Gleim System for Success is a series of control systems meant toguide your preparation process and get you to PASS the first time!

1.16 OTHER CMA REVIEW MATERIALS, SYSTEMS, AND COURSES

Gleim has been helping accountants pass the CMA exam since 1980! We have the experienceand knowledge to help you pass the first time.

Many other CMA review materials, systems, and courses are available to CMA candidates.Generally, they are developed, marketed, and delivered by conscientious and capable individuals. Youhave to decide which programs are best for you. We, of course, want you to be successful with Gleim,but we recognize that you will look at alternative methods and products and may well use one or moreCMA products in conjunction with Gleim to prepare for the CMA exam.

A major distinction among review materials is group study vs. self study. Group study is meetingwith others to share an instructor or other educational techniques, while self study allows you to workon your own time at your own pace.

Group study is presented with live instruction, as well as audio and/or video lectures. With thistype of instruction, someone is usually available to make announcements and answer questions.Before you commit to a group study course, investigate it thoroughly and make sure it suits yourneeds. Attend introductory classes to meet the faculty and acquaint yourself with their knowledgetransfer system. Make sure your instructor is a professor or professional educator, as some groupstudy classes use a PR person who merely turns a recorded lecture on or off!

Self study can be based on textual materials and computer software, as well as audio and/or videoreviews. A combination of these materials is frequently used, as in the Gleim system. Again, the issueis how much knowledge (learning and understanding) is transferred to you. Your objective should be topass the CMA exam, not to spend time and money on review programs.



1.17 HOW MUCH MONEY SHOULD YOU SPEND?

You can spend thousands, but your success depends largely on your determination, how hard youwork, and how much you learn and understand about

1. The examination process.2. The knowledge (subject matter) tested on the exam.3. Answering individual exam questions.4. Taking exams with low passing rates and low passing scores.5. Control systems that assure the best possible performance.

Do not become distracted and waste time focusing on objectives other than the five listed above.

1. AVOID being distracted by advertised pass rates. Many CMA review products andprograms advertise numbers of successful candidates and successful pass rates.Obviously, the best statistics are emphasized. Thus, the reported percentage may be thatfor first-time candidates, all candidates, candidates passing a specific part of theexamination, candidates passing both parts of the exam, or even candidates successfullypassing the exam after a specified number of sittings. The truth is that, because the CMAexam is curved, most CMA candidates make several attempts to pass the CMA exam.

2. AVOID the compulsion to overprepare. Your objective is to pass the exam. While manypeople will ask you if you are a CMA throughout your career, virtually no one will ask youyour exam scores. Many candidates invest time and money in multiple courses, materials,and tutors that contribute only marginally to their effort.

3. AVOID being sold on predictions of the topics to be tested on the next exam. The ICMApublishes Content Specification Outlines. All CMA review providers know the subjectmatter to be tested. The Gleim system emphasizes understanding the core concept of alltopics tested and the use of effective question-answering techniques to do well on eachquestion. Focusing on certain topics and excluding others is NOT a sound strategy.

In summary, we recommend that you follow the suggestions in Study Units 2 through 7 and studywith the Gleim CMA Review System. We have found that our most successful candidates applyDr. Gleim’s study tips in A System for Success and utilize our CMA Review System.

For just $739.95, you can have the entire Gleim system, including books, Test Prep Software,Test Prep for Windows Mobile, Audio CDs, Gleim Online, Essay Wizard, free updates, technicalsupport, and a Personal Counselor. The Gleim CMA Review books break down each respective examtopic part into 10 easily manageable study units. All study units include concise, understandable, andextensive outlines followed by a summary of the core concepts presented and an array of multiple-choice questions with in-depth answer explanations. Each unit also has a practice essay question.The Gleim CMA Audio CDs are 30-minute (on average) summaries of each Gleim study unit presentedby Knowledge Transfer Specialists to help reinforce the material.

Our CMA Test Prep Software contains hundreds of additional multiple-choice questions that arenot offered in our books. Additionally, it has many useful features, including documentation of yourperformance and the ability to simulate the CBT (computer-based testing) exam environment.

Our CMA Gleim Online is a powerful Internet-based program that enables CMA candidates tolearn in an interactive environment that provides feedback. Each CMA Gleim Online candidate hasaccess to a Personal Counselor who helps the candidate organize study plans that work with his/herbusy schedule. Essay Wizard gives you extra practice on essays in an exam-like environment.



STUDY UNIT TWO

ICMA CONTENT SPECIFICATION OUTLINE


2.1 CSO: Financial Planning, Performance, and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152.2 CSO: Financial Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182.3 The Key to Passing the CMA Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

This study unit contains the ICMA Content Specification Outlines (CSOs) of the subject mattertested on the CMA exam, which are organized in outline format with areas, groups, and topics. Thereis a separate CSO for each part of the exam. The ICMA discloses percentage coverage by “areas”only.

Note particularly the ICMA “percentage coverage,” e.g., 20%. All Gleim CMA materials take thesepercentages into account to facilitate your study, learning, and success.

It is difficult, if not impossible, to construct CSOs that are consistent in hierarchical level for theentire body of knowledge necessary to enter the management accounting profession. Thus, you willnotice a lack of consistency in the number of groups under areas and the number of topics undergroups in relation to the percentage weights assigned to each area.

Candidates are responsible for being informed on the most recent developments in the areascovered in the outlines, including understanding public pronouncements issued by accountingorganizations as well as being up-to-date on recent developments reported in current accounting,financial, and business periodicals.

The ICMA has indicated five uses for the Content Specification Outlines:

1. Establish the foundation from which each examination will be developed.2. Provide a basis for consistent coverage on each examination.3. Communicate to interested parties more detail as to the content of each examination part.4. Assist candidates in their preparation for each examination.5. Provide information to those who offer courses designed to aid candidates in preparing for

the examinations.

The Gleim CMA Review System is organized to ensure comprehensive coverage of the ICMACSOs. The Gleim study outlines, the ICMA questions and answers, and the essay questions arepackaged into study units. Study units are identifiable topics that can be completed in a reasonableamount of time. Each study unit contains a Knowledge Transfer Outline covering the subject matter ofthat study unit, a set of Core Concepts statements reviewing the major topics covered, CMA questionswith Gleim answer explanations on the subject matter, and practice essay questions with answerexplanations.

13


Levels of Coverage

1. The cognitive skills that a successful candidate should possess and that should be tested onthe examination can be defined as follows:a. Knowledge: Ability to remember previously learned material, such as specific

facts, criteria, techniques, principles, and procedures (i.e., identify,define, list).

b. Comprehension: Ability to grasp and interpret the meaning of material (i.e., classify,explain, distinguish between).

c. Application: Ability to use learned material in new and concrete situations(i.e., demonstrate, predict, solve, modify, relate).

d. Analysis: Ability to break down material into its component parts so that itsorganizational structure can be understood; ability to recognizecausal relationships, discriminate between behaviors, and identifyelements that are relevant to the validation of a judgment(i.e., differentiate, estimate, order).

e. Synthesis: Ability to put parts together to form a new whole or proposed set ofoperations; ability to relate ideas and formulate hypotheses(i.e., combine, formulate, revise).

f. Evaluation: Ability to judge the value of material for a given purpose on thebasis of consistency, logical accuracy, and comparison tostandards; ability to appraise judgments involved in the selection ofa course of action (i.e., criticize, justify, conclude).

2. The three levels of coverage can be defined as follows:a. Level A: Requiring the skill levels of knowledge and comprehension.b. Level B: Requiring the skill levels of knowledge, comprehension,

application, and analysis.c. Level C: Requiring all six skill levels: knowledge, comprehension,

application, analysis, synthesis, and evaluation.

3. The levels of coverage as they apply to each of the major topics of the Content SpecificationOutlines are shown on the following pages with each topic listing. The levels represent themanner in which topic areas are to be treated and represent ceilings, i.e., a topic areadesignated as Level C may contain requirements at the “A,” “B,” or “C” level, but a topicdesignated as Level B will not contain requirements at the “C” level.

14 SU 2: ICMA Content Specification Outline


2.1 CSO: FINANCIAL PLANNING, PERFORMANCE, AND CONTROL

ICMA CONTENT SPECIFICATION OUTLINES GLEIM STUDY UNITS

Part 1 - Financial Planning, Performance, and Control

A. Planning, Budgeting, and Forecasting


1. Budgeting concepts

a. Operations and performance goalsb. Characteristics of a successful budget processc. Resource allocationd. Other budgeting concepts

2. Forecasting techniques

a. Regression analysisb. Learning curve analysisc. Exponential smoothingd. Time series analysise. Expected value

1. Budgeting Concepts and Forecasting Techniques

3. Budgeting methodologies

a. Annual business plans (master budgets)b. Project budgetingc. Activity-based budgetingd. Zero-based budgetinge. Continuous (rolling) budgetsf. Flexible budgeting

4. Annual profit plan and supporting schedules

a. Operational budgetsb. Financial budgetsc. Capital budgets

5. Top-level planning and analysis

a. Pro forma incomeb. Financial statement projectionsc. Cash flow projections

2. Budget Methodologies and Budget Preparation

B. Performance Management (25% - Levels A, B, and C)

1. Cost and variance measures

a. Comparison of actual to planned resultsb. Use of flexible budgets to analyze performancec. Management by exceptiond. Use of standard cost systemse. Analysis of variation from standard cost

expectations

7. Cost and Variance Measures

2. Responsibility centers and reporting segments

a. Types of responsibility centersb. Transfer pricing modelsc. Reporting of organizational segments

3. Performance measures

a. Product profitability analysisb. Business unit profitability analysisc. Customer profitability analysisd. Return on investmente. Residual incomef. Investment base issuesg. Effect of international operationsh. Critical success factorsi. Balanced scorecard

8. Responsibility Accounting and Performance

Measures

SU 2: ICMA Content Specification Outline 15




C. Cost Management (25% - Levels A, B, and C)

1. Measurement concepts

a. Cost behavior and cost objectsb. Actual and normal costsc. Standard costs

3. Cost Management Terminology and Concepts

d. Absorption (full) costinge. Variable (direct) costingf. Joint and by-product costing

5. Cost Allocation Techniques

2. Costing systems

a. Job order costingb. Process costingc. Activity-based costingd. Life-cycle costing

4. Cost Accumulation Systems

3. Overhead costs

a. Fixed and variable overhead expensesb. Plant-wide versus departmental overheadc. Determination of allocation based. Allocation of service department costs

5. Cost Allocation Techniques

4. Operational efficiency

a. Just-in-time manufacturingb. Material requirements planning (MRP)c. Theory of constraints and throughput costingd. Capacity management and analysis

5. Business process performance

a. Value chain analysisb. Value-added conceptsc. Process analysisd. Benchmarkinge. Activity-based managementf. Continuous improvement conceptsg. Best practice analysish. Cost of quality analysis

6. Operational Efficiency and Business Process

Performance





D. Internal Controls (15% - Levels A, B, and C)

1. Risk assessment, controls, and risk management

a. Internal control structure and managementphilosophy

b. Internal control policies for safeguarding andassurance

c. Internal control riskd. Implications of the Sarbanes-Oxley Act of 2002e. U.S. Foreign Corrupt Practices Act internal

control requirementsf. COSO Internal Control Framework

2. Internal auditing

a. Responsibility and authority of the internal auditfunction

b. Types of audits conducted by internal auditors

9. Internal Controls I

3. System controls and security measures

a. General accounting system controlsb. Application and transaction controlsc. Network controlsd. Flowcharting to assess controlse. Backup controlsf. Disaster recovery procedures

E. Professional Ethics (5% - Levels A, B, and C)

1. Ethical considerations for management

accounting and financial management

professionals

a. Provisions of the IMA Statement of EthicalProfessional Practice

b. Evaluation and resolution of ethical issues suchas

● Fraudulent reporting● Manipulation of analyses and results● Unethical behavior in developing budgets

and standards● Manipulation of decision factors

10. Internal Controls II and Ethics for Management

Accountants



2.2 CSO: FINANCIAL DECISION MAKING


Part 2 - Financial Decision Making

A. Financial Statement Analysis


1. Basic financial statement analysis

a. Common size financial statementsb. Common base year financial statementsc. Growth analysisd. Purposes and components of financial

statements

1. Basic Financial Statement Analysis

2. Financial performance metrics – Financial ratios

a. Liquidityb. Leveragec. Activity

2. Financial Performance Metrics – Financial Ratios

d. Profitabilitye. Market

3. Profitability analysis

a. DuPont analysisb. Income measurement analysisc. Revenue analysisd. Cost of sales analysise. Expense analysisf. Variation analysis

4. Analytical issues in financial accounting

a. Impact of foreign operationsb. Effects of changing prices and inflationc. Off-balance-sheet financingd. Cash flow statement reconciliation to income

statemente. Impact of changes in accounting treatmentf. International Financial Reporting Standards

(IFRS)g. Fair value accountingh. Differences in accounting and economic

concepts of value and incomei. Earnings quality

3. Profitability Analysis and Analytical Issues

B. Corporate Finance (25% - Levels A, B, and C)

1. Risk and return

a. Calculating returnb. Types of riskc. Relationship between risk and returnd. Risk and return in a portfolio contexte. Diversificationf. Asset pricing models

2. Managing financial risk

a. Portfolio managementb. Hedgingc. Financial risk management

4. Investment Risk and Portfolio Management





3. Financial instruments

a. Term structure of interest ratesb. Bondsc. Debt managementd. Common stocke. Preferred stockf. Options and other derivativesg. Valuation of financial instruments

4. Cost of capital

a. Weighted average cost of capitalb. Cost of individual capital componentsc. Calculating the cost of capitald. Marginal cost of capital

5. Financial Instruments and Cost of Capital

5. Managing current assets

a. Working capital terminologyb. Cash managementc. Marketable securities managementd. Accounts receivable managemente. Inventory managementf. Types of short-term creditg. Minimizing the cost of short-term credit

6. Managing Current Assets

6. Raising capital

a. Financial markets and regulationb. Market efficiencyc. Financial institutionsd. Initial public offeringse. Secondary offeringsf. Dividend policy and share repurchasesg. Private placementsh. Lease financing

7. Corporate restructuring

a. Mergers and acquisitionsb. Divestituresc. Bankruptcy

8. International finance

a. Fixed, flexible, and floating exchange ratesb. Managing transaction exposurec. Financing international traded. Transfer pricing tax implicationse. Political risk

7. Raising Capital, Corporate Restructuring, and

International Finance





C. Decision Analysis and Risk Management


1. Cost-volume-profit analysis

a. Breakeven analysisb. Profit performance and alternative operating

levelsc. Analysis of multiple products

2. Marginal analysis

a. Sunk costs, opportunity costs, and other relatedconcepts

b. Marginal costs and marginal revenuec. Special orders and pricingd. Make versus buye. Sell or process furtherf. Add or drop a segmentg. Capacity considerations

3. Pricing

a. Market comparablesb. Setting pricesc. Target costingd. Elasticitye. Product life cycle considerationsf. Market structure considerations

4. Risk assessment

a. Risk identification and exposureb. Definition and scope of operational risk, hazard

risk, financial risk, and strategic riskc. Risk mitigation strategiesd. Enterprise risk management

8. Decision Analysis and Risk Management

D. Investment Decisions (20% - Levels A, B, and C)

1. Capital budgeting process

a. Stages of capital budgetingb. Incremental cash flowsc. Income tax considerations

2. Discounted cash flow analysis

a. Net present valueb. Internal rate of returnc. Comparison of NPV and IRR

3. Payback and discounted payback

a. Uses of payback methodb. Limitations of payback methodc. Discounted payback

4. Ranking investment projects

a. Ranking methodsb. Capital rationingc. Mutually exclusive projects

9. Investment Decisions I





5. Risk analysis in capital investment

a. Sensitivity analysisb. Certainty equivalentsc. Real options

6. Valuation

a. Discounted cash flow modelsb. Multiple modelsc. Valuation for acquisitions and divestituresd. Discount rates

E. Professional Ethics (5% - Levels A, B, and C)

1. Ethical considerations for the organization

a. Anti-bribery provisions of the U.S. ForeignCorrupt Practices Act

b. Provisions of IMA’s Statement on ManagementAccounting, “Values and Ethics: From Inceptionto Practice”

c. Corporate responsibility for ethical conduct

10. Investment Decisions II and Ethical Considerations

for the Organization

Reminder: The ICMA CSOs have three levels: areas, groups, and topics. The ICMA specifies percentage information only for“areas.” Gleim study units are organized both to provide comprehensive coverage and to facilitate learning and understanding.

2.3 THE KEY TO PASSING THE CMA EXAM

The CMA exam tests a large amount of subject matter that candidates must study and review, aprocess involving a lot of work.

Additionally, the exam is difficult, time-constrained, and tricky (or, stated politely, “discriminating”).Each part tests a wide body of knowledge.

The Gleim CMA Review series focuses on the skills and knowledge needed to pass the CMAexam. This booklet, CMA Review: A System for Success, assists the CMA candidate beyond theactual studying of the subject matter tested. It facilitates preparation for success on the CMA exam anddemonstrates the difference between passing and failing. Re-examination candidates benefitimmensely from this material as well.

Preparation is the key: Know what to expect and what to do to pass the exam! Notice thesimilarity of being prepared and being in control. When you are prepared, you know what to expect andwhat to do! Control yields confidence. Control is exactly what Gleim CMA Review gives you.

Be positive! View CMA preparation and the exam as a challenge that will be funwhen you are in control. You will PASS if you

1. Study and understand the information in this booklet.2. Work through each study unit in the current edition of our CMA Review

books, Test Prep Software, Test Prep for Windows Mobile, Audio CDs,Gleim Online, and Essay Wizard as suggested in Study Unit 6, Subunit 10.a. Each 20-question test in CMA Test Prep Software and Test Prep for

Windows Mobile takes only 30 minutes and should be viewed as achallenging, exciting game in which you continually improve withpractice.



Gleim Steps to CMA Exam Success

Understand the CMA exam process,including subject matter coverage,preparation, format, administration,and grading.

Step 1 is vital to achieving success. This booklet,CMA Review: A System for Success, wasspecifically written for this purpose.

Learn and understand the subjectmatter tested.

The Gleim CMA Review System provides you with a“core concept” understanding of all topics tested onthe CMA exam as specified in the ICMA’s CSOs.Do not gamble by focusing on certain topics andexcluding other topics from your study program.Our Knowledge Transfer Outlines and answerexplanations present all the information you need.

Perfect your question-answeringtechniques by answering recentexam questions.

Our Test Prep Software and Test Prep for WindowsMobile are designed to help you use controlsystems to answer each type of question and totake each part of the exam. They have thousandsof multiple-choice questions to acclimate you to atest-taking environment.

Plan and practice exam execution. ● Use the Gleim INTERACTIVE system of books,Test Prep Software, Test Prep for WindowsMobile, Audio CDs, Gleim Online, and EssayWizard. Even the books are interactive, withcomplete answer explanations to theimmediate right of each question.

● Study Unit 6 of this booklet explains the tacticsthat our most successful candidates use.Implement STUDY DISCIPLINE developed bycontrol systems to prepare you for the exam.The Gleim system encourages study disci-pline, a tremendous aid to CMA candidates.

Develop the confidence you needto succeed.

The Gleim 20 easy-to-complete study units promoteconfidence and a sense of accomplishment aftercompleting each one.● Always UP-TO-DATE materials ensure that you

have the right information.● 24-hour TECHNICAL SUPPORT responds by

fax or email for any inquiry concerning ourbooks, Test Prep Software, Test Prep forWindows Mobile, Audio CDs, Gleim Online,and/or Essay Wizard.

● INTUITIVELY APPEALING presentations andexplanations facilitate your study effort.

● Experience LESS FATIGUE while using ourbooks due to their special indentations andline spacing.



STUDY UNIT THREE

EXAM PREPARATION, ADMINISTRATION, AND GRADING


3.1 The Nondisclosed Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233.2 Pretesting Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243.3 The CMA Exam Format . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243.4 How Ethics are Tested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243.5 Registering and Preparing for the Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243.6 Grading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253.7 Pass Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Recall that one of the steps to exam success is understanding all there is to know about theexamination process and its implications in order to maximize your exam score. You need to know howthe exam is prepared so you know what to expect in both subject matter and question formats and alsoso you have confidence in the fairness and security of the exam. Exam administration proceduresdirectly affect your exam-taking techniques.

This study unit consists primarily of a detailed listing of procedures and rules used to administer theexam. Remember, the more you know about the examination process and what to expect, the biggeryour competitive advantage over others taking the exam.

You may choose to skim this study unit, which contains details of the administration of theexamination and the content of the parts. You should return and study this study unit after you readStudy Unit 7, “How to Take the CMA Exam,” so you know exactly what to expect. Leave nothing tochance, and be in total control of the examination process.

3.1 THE NONDISCLOSED EXAM

The CMA is a nondisclosed exam for three reasons:

1. Pretest objective items (i.e., questions) to assemble a large, high-quality item bank.2. Statistically equate each examination for differences in the level of difficulty.3. Facilitate computer administration of the CMA examination in the future.

How does the nondisclosed exam affect you as a CMA candidate? Very little, except you will berequired to sign an attestation, and you will be warned about the disastrous consequences of disclosinginformation about specific questions and/or answers.

Gleim CMA Review will continue to be the industry leader. We have been writing, editing, andanswering CMA and other professional exam-type questions since 1980! Expect to see fresh, newquestions from your authors in the Gleim CMA Review materials.

To maintain our competitive edge, we ask you and other CMAs and CMA candidates for feedbackand suggestions on how to improve our materials with emphasis on topics to be strengthened and/oradded. We provide evaluation and feedback forms at the back of each of our books for your commentsand suggestions. This process has been approved by the ICMA.

The Gleim books, Test Prep Software, Test Prep for Windows Mobile, Audio CDs, Gleim Online,and Essay Wizard emphasize knowing exactly what will be expected of you during the CMA exam andpreparing you for what will be required. We also help you avoid overpreparation. We change ourapproach and subject matter coverage as the exam changes.

23


3.2 PRETESTING QUESTIONS

The ICMA pretests multiple-choice questions on each exam part. You will not know which are“pretest” questions and thus must answer each question as if it will be graded.

3.3 THE CMA EXAM FORMAT

CMA candidates must complete two examination parts. The CMA examination is given in acomputer-based format. Both parts consist of 100 carefully constructed multiple-choice questions andtwo essay questions. Both written and quantitative responses will be required.

ICMA’S CMA CONTENT SPECIFICATION OUTLINE OVERVIEW


Planning, Budgeting, and Forecasting 30%Performance Management 25%Cost Management 25%Internal Controls 15%Professional Ethics 5%


Financial Statement Analysis 25%Corporate Finance 25%Decision Analysis and Risk Management 25%Investment Decisions 20%Professional Ethics 5%

Your CMA exam should be made up of questions that reflect the ICMA Content SpecificationOutlines, delivered in random order (i.e., not reflective of the order the topics are presented in theCSOs). (See Study Unit 2.) When taking the exam, your concern is with answering each question tothe best of your ability, not with the topical coverage. Expect the unexpected and deal with it. Themore difficult the exam, the better for you because you will be more suitably prepared to maximize yourscore. Remember, only the top candidates PASS!

3.4 HOW ETHICS ARE TESTED

Ethical issues and considerations will be tested from the perspective of the individual in Part 1 andfrom the perspective of the organization in Part 2. Candidates will be expected to evaluate the issuesinvolved and make recommendations for the resolution of the situation.

3.5 REGISTERING AND PREPARING FOR THE EXAM

After registering for an exam part, the ICMA will send you authorization to take the exam within aspecified testing window based on the date on which you registered (see Study Unit 1, Subunit 12).The authorization letter will instruct you to proceed to Prometric’s online scheduling site, which iswww.prometric.com/ICMA, or you may call the Prometric registration office at (800) 479-6370 andschedule your test at a local Prometric testing center.

As soon as the ICMA sends you a computer-based test authorization, contact Prometric toschedule your test at a convenient time (within the appropriate testing windows) and testing center. Inalmost all cases, you should be able to drive to your testing site, take the test, and return home in oneday. If the exam is not being given within driving distance of your home, research suitable hotelaccommodations on the Internet. Stay by yourself at a hotel to ensure that you avoid distractions. Thehotel room should be soundproof and have a comfortable bed and desk suitable for study. If possible,stay at a hotel with the recreational facilities you normally use, e.g., a swimming pool, weight room, etc.

Proper exercise, diet, and rest in the weeks before you take your exam are very important. Highenergy levels, reduced tension, and an improved attitude are among the benefits. A good aerobicfitness program, a nutritious and well-balanced diet, and a regular sleep pattern will promote your long-term emotional and physical well-being as well as contribute significantly to favorable exam results. Ofcourse, the use of health-undermining substances should be avoided.

24 SU 3: Exam Preparation, Administration, and Grading


Plan ahead and systematically prepare. Then go to the exam and give it your best; neither you noranyone else can expect more. Having undertaken a systematic preparation program, you will do fine.

Maintain a positive attitude and do not become depressed if you encounter difficulties before orduring the exam. An optimist will usually do better than an equally well-prepared pessimist.Remember, you have reason to be optimistic because you will be competing with many less-qualifiedpersons who have not prepared as well as you have.

Don’t forget to call your local Prometric testing center a day or two before your test to confirm yourtime and obtain directions to the testing center or visit the Prometric website at www.prometric.com.You should also find directions on your own at MapQuest or some other Internet-based map utility.

3.6 GRADING

You will not receive immediate pass/fail results on your CMA exam because the essays must begraded offline at a later time. The scores will be mailed approximately 6 weeks after the close of thetesting window.

The essays are worth 25% of the total exam score, and the multiple-choice section is worth 75%.The scores for the multiple-choice section will be added to the scores of the essay section for a totalweighted score of pass/fail reflected in a scaled score for the entire part. You MUST score at least 50%on the multiple-choice section of the exam to be allowed to take the essay section. This requirementensures that test takers do not proceed with the essay section if they do not have a chance of achievinga passing score for the entire exam. If you are allowed to proceed, it does not mean that you passed.You still must perform well enough on the essay section of the exam to achieve a total passing score.

Candidates are given different “forms” of the exam, and it is therefore necessary to establish apassing score for each form, taking into consideration the relative difficulty of the items contained ineach form. In order to equate all scores for all forms of the exam, the scores for each part are placedalong a scale from 0 to 500. On this scale, a score of 360 represents the minimum passing scaledscore. One form of the exam might require a passing percentage of 70% and another a passingpercentage of 65%; both of these passing percentages would represent a scaled score of 360. Thescaled score allows candidates to know how they performed in relation to the passing standard of 360.Although the passing standard differs according to the relative difficulty of the exam form, you shouldtry to score more than 75% in both the multiple choice and essay sections. Candidates are notrequired to “pass” both sections; the total score determines pass/fail status.

Individual questions are not weighted in the sense that one question is worth more points thananother question. All questions are of equal point value. The individual questions do determine therelative difficulty of the entire set of questions, or “form,” of the exam. When a candidate takes anexam, a set of questions is randomly selected. Each question included in the set of questions has adifficulty rating that, together with all the other questions, determines the relative difficulty of thatparticular set of questions. This relative difficulty determines the number of questions that must beanswered correctly in order to pass. A relatively difficult exam will require fewer correct items than aneasier exam.

There is no penalty for incorrect answers. Therefore, you should select an option that seemsreasonable rather than leave an answer blank, particularly if you can eliminate one or two of the optionsas being incorrect. This strategy of educated guessing is covered more thoroughly in Study Unit 4.

SU 3: Exam Preparation, Administration, and Grading 25


3.7 PASS RATES

Two-Part CMA Exam:May 1, 2010 –

October 31, 2010

PART 1 – Financial Planning, Performance, and Control 40%PART 2 – Financial Decision Making 36%Transition Exam 48%

Four-Part CMA Exam:July 1, 2009 –June 30, 2010

July 1, 2004 –June 30, 2009

PART 1 – Business Analysis 51% 52%PART 2 – Management Accounting and Reporting 35% 54%PART 3 – Strategic Management 36% 57%PART 4 – Business Applications 58% 60%

A major difference among CMA candidates is their preparation program. You have access to thebest CMA review material; it is up to you to use it. Conversely, if you do not apply the suggestions inthis booklet, CMA Review: A System for Success, you will be at a disadvantage to the thousands ofcandidates who will pass with Gleim. Even if you are enrolled in a review course that uses othermanuals, you will benefit with the Gleim books, Test Prep Software/Test Prep for Windows Mobile,Audio CDs, Gleim Online, and Essay Wizard. Compare our products to theirs and understand whyGleim has helped more CMA candidates than any other program.

26 SU 3: Exam Preparation, Administration, and Grading


STUDY UNIT FOUR

MULTIPLE-CHOICE QUESTIONS


4.1 CMA Exam Parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274.2 Multiple-Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284.3 Less Traditional Multiple-Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284.4 Multiple-Choice at Prometric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304.5 Multiple-Choice Question-Answering Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314.6 If You Don’t Know the Answer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324.7 Answer Explanations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324.8 Practicing Multiple-Choice Time Budgeting and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

This study unit (“Multiple-Choice Questions”) and Study Unit 5 (“Essay Questions”) explain questionformats that appear on the CMA exam. We also explain how to budget your time for each part andsuggest a question-answering technique for each question format. You will probably recognize thatyour question-answering technique is a specific control system application.

We cannot say that your question-answering technique control system is more important than yourother control systems, which include understanding the exam, studying individual Gleim study units,and planning and practicing exam execution. You will, however, be confident about your performanceon the CMA exam when you are poised to maximize your points on every question.

4.1 CMA EXAM PARTS

There are two parts to the CMA exam.



Both parts include 100 multiple-choice questions and two essay questions. The multiple-choicequestions will be delivered in random order, meaning that the order of questions will not reflect theorder in which the topics are presented in the CSOs. Four hours is allowed for the completion of anentire part (3 hours for the multiple-choice, 1 hour for the essays). If you complete your 100 multiple-choice questions by allocating 1.5 minutes per question, you will have 30 minutes to review. Use asmuch of this time to review as you need, and then move on to the essays. Your unused multiple-choicesection time will be carried over to the essay section and added on to the hour time allocation.

Do not be surprised or flustered if you end up with more or less than 30 minutes left on the timeremaining clock when you have finished all 100 of your multiple-choice questions. If you have morethan 30 minutes, do a thorough review of your marked questions, make sure you have answered all100 questions, and move on to the essays knowing you have plenty of time.

If you finish with less than 30 minutes, do not panic. Remain calm and in control. Make sure youhave answered all 100 questions (make educated guesses if you need to) and move on to the essays.One hour is certainly enough to answer both questions -- you’re doing fine! See the rest of this studyunit for more information on time-budgeting, control, and question-answering techniques for themultiple-choice section.

27


4.2 MULTIPLE-CHOICE QUESTIONS

Multiple-choice questions consist of a stem (the question) and four answer choices. One answer iscorrect, and three answer choices are incorrect. Another view is that there is one answer choice that isthe best response to the question stem. Two CMA multiple-choice questions appear below.

Part 11. Which one of the following best describes directlabor?

A. A prime cost.B. A period cost.C. A product cost.D. Both a product cost and a prime cost.

Part 22. Hi-Tech, Inc. has determined that it can minimize itsweighted average cost of capital (WACC) by using adebt-equity ratio of 2/3. If the firm’s cost of debt is 9%before taxes, the cost of equity is estimated to be 12%before taxes, and the tax rate is 40%, what is the firm’sWACC?

A. 6.48%B. 7.92%C. 9.36%D. 10.80%

Some multiple-choice questions contain words like except, not, unless, least, etc., as illustratedbelow.

Which of the following is not a method of financinginternational trade?

All of the following statements in regard to workingcapital are true except

These negative stems ask for the false answer choice, which is accompanied by three true answerchoices. Expect a few multiple-choice questions with negative stems on the exam. Presumably, theICMA will print these negative words in bold type, as illustrated above.

4.3 LESS TRADITIONAL MULTIPLE-CHOICE QUESTIONS

Other types of multiple-choice questions include

1. Questions with two or three answer options2. Questions with two, three, or four variables in each answer3. Graphic representations

Occasionally, the ICMA converts two- and three-answer multiple-choice questions into four-answermultiple-choice questions. Mark each of the I, II, III, and IVs as true or false.

3. Mega, Inc., a large conglomerate with operatingdivisions in many industries, uses risk-adjusted discountrates in evaluating capital investment decisions. Considerthe following statements concerning Mega’s use ofrisk-adjusted discount rates:I. Mega may accept some investments with internal

rates of return less than Mega’s overall average costof capital.

II. Discount rates vary depending on the type ofinvestment.

III. Mega may reject some investments with internal ratesof return greater than the cost of capital.

IV. Discount rates may vary depending on the division.Which of the above statements are correct?

A. I and III only.B. II and IV only.C. II, III, and IV only.D. I, II, III, and IV.

28 SU 4: Multiple-Choice Questions


Other multiple-choice questions have several variables (or answers) within each answer optionand are presented in columns. Circle the correct answer in each column.

4. The costing method that is properly classified for bothexternal and internal reporting purposes is

ExternalReporting

InternalReporting

A. Activity-based costing No YesB. Job-order costing No YesC. Variable costing No YesD. Process costing No No

Yet other questions require various graphical interpretation, as illustrated in question 5 below.

5. In referring to the graph of a firm’s cost of capital, if e isthe optimal position, which one of the following statementsbest explains the saucer or U-shaped curve?

A. The composition of debt and equity does not affectthe firm’s cost of capital.

B. The cost of capital is almost always favorablyinfluenced by increases in financial leverage.

C. The cost of capital is almost always negativelyinfluenced by increases in financial leverage.

D. Use of at least some debt financing will enhance thevalue of the firm.

The correct answers and answer explanations for sample questions 1 through 5 are presentedbeginning on page 32.

The previous discussion has illustrated the types of multiple-choice questions you can expect tosee on the CMA exam. Remember to answer all questions. Your grade will be based on the totalnumber of correct answers; there is no penalty for guessing.

Conceptual vs. Calculation Questions

Some CMA exam questions will be calculations in contrast to conceptual questions. When youtake the test, it may appear that more of the questions are calculation-type because they take longerand are more difficult.

SU 4: Multiple-Choice Questions 29


4.4 MULTIPLE-CHOICE AT PROMETRIC

Prometric Computer Screen Layout

A menu offering a number of options is displayed at the bottom of the question screen. You mayselect an option by pressing the appropriate symbol key or highlighted letter on your keyboard or byclicking on the symbol or letter with your mouse.

1. Question Number: Remember, there are 100 multiple-choice questions in each part.2. Time Remaining: Always in hours, minutes, and seconds.3. Review Items: Review questions and end the quiz.4. Question: Click best answer.5. Mark for Review: Any question you wish to return to. Keep these to a minimum while doing

practice exams and on your real CMA exam so as to maintain the 1.5 minutes per questiontime budget. You can indicate the letter M on your keyboard.

6. Next: To move to next question. You can indicate the letter N or the right arrow key on yourkeyboard.

7. Previous: To move to previous question. You can indicate the letter P or the left arrow keyon your keyboard.

8. Time Value Tables: To open new window with tables of time value of money factors.

USE GLEIM CMA TEST PREP Software and GLEIM ONLINE.They emulate the Prometric testing procedures and environment,including computer screen layout, software operation, etc.



4.5 MULTIPLE-CHOICE QUESTION-ANSWERING TECHNIQUE

The following suggestions are to assist you in maximizing your score on each part of the CMAexam. Remember, knowing how to take the exam and how to answer individual questions is asimportant as studying/reviewing the subject matter tested on the exam.

1. Budget your time.

a. We make this point with emphasis. Just as you would fill up your gas tank prior toreaching empty, so too should you finish your exam before time expires.

b. You have 180 minutes to answer 100 questions, i.e., 1.8 minutes per question. Wesuggest you allocate 1.5 minutes per question. This would result in completing100 questions in 150 minutes to give you 30 minutes to review questions that youhave marked. [See 3.f. on the next page for a brief discussion on marking questionsat Prometric.]

c. On your Prometric computer screen, the time remaining (starting with 3:00:00)appears at the lower left corner of your screen.

2. Answer the questions in consecutive order.

a. Do not agonize over any one item or question. Stay within your time budget.b. Mark any questions you are unsure of and return to them later.c. Never leave a multiple-choice question unanswered. Make your best guess in the

time allowed. Remember that your score is based on the number of correctresponses. You will not be penalized for guessing incorrectly.

3. For each multiple-choice question,

a. Try to ignore the answer choices. Do not allow the answer choices to affect yourreading of the question.1) If four answer choices are presented, three of them are incorrect. These choices

are called distractors for good reason. Often, distractors are written to appearcorrect at first glance until further analysis.

2) In computational items, the distractors are carefully calculated such that they arethe result of making common mistakes. Be careful, and double-check yourcomputations if time permits.

b. Read the question carefully to determine the precise requirement.1) Focusing on what is required enables you to ignore extraneous information, to

focus on the relevant facts, and to proceed directly to determining the correctanswer.a) Be especially careful to note when the requirement is an exception; e.g.,

“All of the following statements regarding a company’s internal rate ofreturn are true except:”

c. Determine the correct answer before looking at the answer choices.d. Read the answer choices carefully.

1) Even if the first answer appears to be the correct choice, do not skip theremaining answer choices. Questions often ask for the “best” of the choicesprovided. Thus, each choice requires your consideration.

2) Treat each answer choice as a true/false question as you analyze it.e. Click on the best answer.

1) If you are uncertain, guess intelligently. Improve on your 25% chance of gettingthe correct answer with blind guessing.

2) For many multiple-choice questions, two answer choices can be eliminated withminimal effort, thereby increasing an educated guess to a 50-50 proposition.



f. As you answer a question, you can mark it by pressing the “Mark” button or unmark amarked question by pressing the “Marked” button. After you have answered, marked,or looked at and not answered all 100 questions, you will be presented with a reviewscreen that shows how many questions you did not answer and how many youmarked. You then have the option of revisiting all of the unanswered questions and“marked” questions.1) Answer all of the questions you did not answer.2) Go back to the marked questions and review your answer choices.3) Verify that all questions have been answered.

4.6 IF YOU DON’T KNOW THE ANSWER

Guess, but make it an educated guess, which means select the best possible answer. First, ruleout answers that you think are incorrect. Second, speculate on what the ICMA is looking for and/or therationale behind the question. Third, select the best answer or guess between equally appealinganswers. Unless you made an obvious mistake or computational error, try to avoid changing answers.Your first guess is usually the most intuitive.

If you cannot make an educated guess, read the question and each answer and pick the best ormost intuitive answer. It’s just a guess!

4.7 ANSWER EXPLANATIONS

Here are the answer explanations for the multiple-choice questions presented in this study unit. Itis crucial that you understand why you misanswered each question in your study program. The betteryou understand why you make mistakes, the fewer you will make on your CMA exam!

1. Answer (D) is correct. (CMA, adapted)REQUIRED: The best description of direct labor.DISCUSSION: Direct labor is both a product cost and a

prime cost. Product costs are incurred to produce units ofoutput and are deferred to future periods to the extent thatoutput is not sold. Prime costs are defined as directmaterials and direct labor.

Answer (A) is incorrect. Direct labor is also a productcost. Answer (B) is incorrect. A period cost is expensedwhen incurred. Direct labor cost is inventoriable.Answer (C) is incorrect. Direct labor is also a prime cost.

3. Answer (D) is correct. (CMA, adapted)REQUIRED: The true statement about use of risk-

adjusted discount ratesDISCUSSION: Risk analysis attempts to measure the

likelihood of the variability of future returns from theproposed investment. Risk can be incorporated into capitalbudgeting decisions in a number of ways, one of which is touse a hurdle rate higher than the firm’s cost of capital, thatis, a risk-adjusted discount rate. This technique adjusts theinterest rate used for discounting upward as an investmentbecomes riskier. The expected flow from the investmentmust be relatively larger, or the increased discount rate willgenerate a negative net present value, and the proposedacquisition will be rejected. Accordingly, the IRR (the rate atwhich the NPV is zero) for a rejected investment mayexceed the cost of capital when the risk-adjusted rate ishigher than the IRR. Conversely, the IRR for an acceptedinvestment may be less than the cost of capital when therisk-adjusted rate is less than the IRR. In this case, theinvestment presumably has very little risk. Furthermore,risk-adjusted rates may also reflect the differing degrees ofrisk, not only among investments, but by the sameinvestments undertaken by different organizational subunits.

Answer (A) is incorrect. Discount rates may vary withthe project or with the subunit of the organization. Answer(B) is incorrect. The company may accept some projectswith IRRs less than the cost of capital or reject some projectwith IRRs greater than the cost of capital. Answer (C) isincorrect. The company may accept some projects withIRRs less than the cost of capital or reject some project withIRRs greater than the cost of capital.

2. Answer (C) is correct. (CMA, adapted)REQUIRED: The firm’s weighted-average cost of

capital.DISCUSSION: A firm’s weighted-average cost of capital

(WACC) is derived by weighting the (after-tax) cost of eachcomponent of the financing structure by its proportion of thefinancing structure as a whole. Hi-Tech’s WACC can becalculated as follows:

ComponentComponent Weight Cost TotalsDebt 40% × 5.4% = 2.16%Equity 60% × 12.0% = 7.20%

9.36%

Answer (A) is incorrect. Improperly subtracting theeffect of taxes from the cost of equity results in 6.48%.Answer (B) is incorrect. Improperly subtracting the effect oftaxes from equity, but not from debt, results in 7.92%.Answer (D) is incorrect. Improperly using the before-taxcost of debt results in 10.80%.



4. Answer (C) is correct. (CMA, adapted)REQUIRED: The costing method that is properly

classified for both internal and external reporting purposes.DISCUSSION: Activity-based costing, job-order costing,

process costing, and standard costing can all be used forboth internal and external purposes. Variable costing is notacceptable under GAAP for external reporting purposes.

Answer (A) is incorrect. ABC is appropriate forexternal as well as internal purposes. Answer (B) isincorrect. Job-order costing is acceptable for externalreporting purposes. Answer (D) is incorrect. Processcosting is acceptable for external reporting purposes.

5. Answer (D) is correct. (CMA, adapted)REQUIRED: The best explanation of the U-shaped

curve in a cost-of-capital graph.DISCUSSION: The U-shaped curve indicates that the

cost of capital is quite high when the debt-to-equity ratio isquite low. As debt increases, the cost of capital declines aslong as the cost of debt is less than that of equity.Eventually, the decline in the cost of capital levels offbecause the cost of debt ultimately rises as more debt isused. Additional increases in debt (relative to equity) willthen increase the cost of capital. The implication is thatsome debt is present in the optimal capital structurebecause the cost of capital initially declines when debt isadded. However, a point is reached at which debt becomesexcessive and the cost of capital begins to rise.

Answer (A) is incorrect. The composition of the capitalstructure affects the cost of capital since the componentshave different costs. Answer (B) is incorrect. The cost ofdebt does not remain constant as financial leverageincreases. Eventually, that cost also increases. Answer (C)is incorrect. Increased leverage is initially favorable.

4.8 PRACTICING MULTIPLE-CHOICE TIME BUDGETING AND CONTROL

On the CMA exam, your largest potential problem and your greatest potential advantage is timemanagement. The CMA exam requires you to budget your time with a time-remaining clock in hours,minutes, and seconds. We recommend budgeting 1.5 minutes per multiple-choice question. Doing sowill allow you to answer all 100 questions in 150 minutes, giving you 30 minutes to review.

Using the Gleim Study System for multiple-choice, we want you to live by and thrive on20-question practice tests. We use 20-question tests because they are of sufficient length to work youbut are not too long. Based on 35 years of experience, we are very confident recommending and using20-question tests. You will have no trouble budgeting your time on the exam after extensive practicewith 20-question tests.

Each 20-question practice test should be completed in 30 minutes (1.5 minutes per question)under exam conditions. Practice “marking” questions you wish to return to, but select the best answerfor each question on your first pass.

Review Sessions: It is imperative that you review each question you marked and/or answeredincorrectly after you have completed each test. For each question, analyze and understand why youanswered it incorrectly. This step is an essential learning activity. Review sessions must not be part ofyour 30-minute time budget. During the exam, there will be no extra time for review sessions.

You learn more from each question of which you were unsure or answered incorrectly than fromquestions answered correctly.

Why did you answer incorrectly?a. Misreading the requirement (stem)b. Failing to understand what is requiredc. Making a math errord. Applying the wrong rule or concept

e. Being distracted by one or more of the answersf. Incorrectly eliminating answers from

considerationg. Lacking any knowledge of the topic testedh. Employing bad intuition when guessing

More important than learning and understanding subject matter is learning how to answerquestions when you are unsure of the correct answer. You want to become a good “educatedguesser.”

Testing before study: Consistent with our “expect the unexpected and deal with it” approach, werecommend you do at least one 20-question test of multiple-choice questions before you study a studyunit. This will increase your competence and confidence answering difficult questions, i.e., questionson which you are not sure of the answer.



STUDY UNIT FIVE

ESSAY QUESTIONS


5.1 CMA Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355.2 Essay Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365.3 Essay Tactics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415.4 Sample Essay Directions Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435.5 Sample Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

5.1 CMA ESSAY QUESTIONS

Each part of the CMA exam contains two essays. You have at least 1 hour to complete both. Ifyou finished your multiple-choice questions section in less than 3 hours, your remaining time will becarried over to the essay section and added to the standard 1-hour allocation. See Subunit 5.3 formore information on essay time budgeting and control. The essay can cover any topic within thespecific part only, meaning that no Part 2 topics will be tested on Part 1 essays and vice versa.

The essay questions are delivered via computer at Prometric Testing Centers. For essay questionsthat require a purely written answer, you will have a box in which to type your response. For certainproblems that require quantitative responses, you will be able to use a spreadsheet tool to present yourcalculations beginning in May of 2011. For complete instructions and the ICMA’s recommendationsregarding the use of the spreadsheet function, go to www.prometric.com/ICMA/demo.htm.

The written-response questions will not be graded online and, therefore, you will not immediatelyreceive your grade. The questions will be graded by subject matter experts, and partial credit will begiven. For example, if you are asked to give three reasons why a selected alternative action is good fora business and you provide only two correct reasons, you will receive partial credit for these tworesponses. Likewise, for questions requiring a calculated response, partial credit will be given for acorrect formula even though a mathematical error may have been made in the final number.

Points will not be awarded for writing skills; however, your answer must be clear enough for thegrader to understand the intent of your response. If the response cannot be understood or iscontradicted later in your answer, credit will not be given.

Written-response questions provide a comprehensive way to more effectively test advanced skills,such as the ability to evaluate a given set of data, make a judgment given alternative solutions, orjustify a selected course of action. While these skills can be tested through the use of objectivequestions, the written-response questions more closely reflect live business situations where a writtenor oral response would be expected.

Preparing for the essay questions is complex. To become an expert on answering essays, studyGleim CMA Review material, consult with your Personal Counselor, and read our advice in this studyunit. Be sure to practice as much as possible by answering all of the essays in the Gleim books,Gleim Online, and the Essay Wizard.

CMA GLEIM ONLINE and Essay Wizard are interactivereviews that emulate the Prometric testing environmentand give you the CONFIDENCE to PASS the essays onthe CMA exam!

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5.2 ESSAY INSTRUCTIONS

The directions below and on the following pages are similar to those provided by the ICMA. It isvery important to become familiar with these instructions so that you can spend more of your timefocusing on the content of the exam, rather than on the format. We have added screen shots ofPrometric-emulating essay questions to better prepare you for how the exam will look.

1. Typing your response

Below are parts of the essay question screen:● Question Area - may also contain an Exhibit button to display additional text● Answer Box - where your answer will appear when you type● Word Processing Tools - specific function buttons above the Answer Box

The blinking vertical line (cursor) shows where typed text will start. The mouse pointer will look like alarge capital I when you are working in the Answer Box.

2. Using the scroll function

A scroll bar appears when a question doesn’t fit on a single screen. Scroll bars may be horizontal orvertical. To scroll through the screen contents, click the scroll arrow that points in the appropriatedirection to move a short distance. To move up or down one screen at a time, click within the scroll barabove or below the scroll box.

36 SU 5: Essay Questions


3. Functions available from your keyboard

Backspace - removes text to the left of the cursorHome - moves the cursor to the beginning of the lineEnd - moves the cursor to the end of the lineArrow cluster - use to move the cursor up, down, or right without removing textEnter - moves the cursor to the beginning of the next linePage Up - moves the cursor up one screenPage Down - moves the cursor down one screenTab and Delete are NOT available in this program. Bullets, Align Text, and Keyboard Shortcutsare also NOT available.

4. Inserting text

Position the mouse pointer at the place where you want to add the text. Click to place the cursor at thatlocation and type the text that you want to add.5. Highlighting text

You will need to HIGHLIGHT text to move or copy it. This is an optional feature and is not necessary tocomplete the writing sample questions.To highlight text, position the mouse pointer directly before the first letter you want to highlight andpress the mouse button down. While holding it down, slide or roll (drag) the mouse until all the desiredtext is highlighted. Release the mouse button (the text will remain highlighted). To unhighlight, clickagain anywhere within the Answer Box.Warning: If you type on the keyboard while you have text highlighted, what you type will replace thehighlighted material. If you change your mind about moving and copying the highlighted text, be surethat you unhighlight it before returning to typing.

SU 5: Essay Questions 37


6. Cutting and pasting text

The CUT button cuts (removes) a highlighted block of text and stores it in the computer’s memory. TheCOPY button leaves the highlighted text in place and stores a copy in memory. COPY may be useful ifyou aren’t sure yet where you want that text to appear in your answer. The text is stored only until youCUT and COPY again, storing a new block of text. The PASTE button inserts the block of text that youmost recently cut or copied at the spot where you placed the cursor. These are optional features andare not necessary to complete the writing sample questions.To CUT or COPY, highlight the text and click on the CUT or COPY button. To PASTE, CUT, or COPYthe text you want to paste, click on the place where you want the text to appear, and click on thePASTE button.

7. Saving your response

Clicking on SAVE stores what you have typed in response to the current question. It is recommendedthat you SAVE your answer every 5 minutes. When you have finished answering the question, reviewyour answer and make any final revisions. Once you are satisfied with your answer, click on SAVE tostore this answer. Clicking on “Next” to move on to the next question will automatically save yourcompleted response.

8. Using the spreadsheet

A limited-function spreadsheet tool has been added to the essay-based questions on your CMA exam.The tool will be available during one of your essay questions to assist you in computing your answer.This new functionality will make it easier for you to align columns of numbers and perform certaincalculations that can sometimes be more difficult in an essay-based format.



The following tools and their respective icons are available in each spreadsheet in CMA Gleim Online:

To use formulas in the spreadsheet, click on the cell in which you wish to insert the formula, click in thetext box at the top of the spreadsheet, and then click on the “Insert Formula” button.

To accept the text in the text box at the top of the spreadsheet, click on the green “Enter” button.

To cancel and delete the text in the text box at the top of the spreadsheet, click on the red “Cancel” button.

To cut text within the spreadsheet, click on the “Cut” button.*

To copy text within the spreadsheet, click on the “Copy” button.*

To paste text within the spreadsheet, click on the “Paste” button.*

9. Reviewing items

At the end of the exam, you will see a scrollable listing of all the question numbers. This list displayseach question number and indicates if the question has been marked for review, completed, or skipped.

a. To review questions

Click on the Review All button. You will be moved to the first question. Clicking on the Nextbutton will cause you to move to the next question. You can also double-click on the questionnumber in the list to move to a particular question.

b. To review marked questions

Click on the Review Marked button. You will be moved to the first marked question. Clicking onthe Next button will cause you to move to the next marked question.

* The Cut, Copy, and Paste tools in the image on this page are covered by the pop-up box that contains theScenario and Question. In the course, you will be able to move this pop-up box to access those tools.



c. To review incomplete questions

Click on the Review Incomplete button. You will be moved to the first incomplete question.Clicking on the Next button will cause you to move to the next incomplete question.

10. Using exhibit buttons

During the examination, you will see a series of buttons at the bottom of your screen. The buttons linkto a calculator and tables to assist you.When you click one of the buttons, a pop-up window will appear displaying the exhibit. When you arefinished viewing the exhibit, you may click on the Close Window button located at the lower-left-hand ofthe exhibit window. If you need to resize the window, you can do so by moving the mouse pointer overthe edge of the window. When it changes to an arrow pointing two ways, you may hold down the leftmouse button and then drag the mouse to resize the window. Keep in mind that the images will notchange size along with the window.



5.3 ESSAY TACTICS

The Gleim essay questions in Gleim Online and Essay Wizard allow you to prepare for the essaysection of your exam under true exam conditions. Each study unit in Gleim Online includes one essayscenario with 1-4 questions each. Each study unit in Essay Wizard contains two additional scenarios.After you grade each essay question, you should review the concepts that you marked and/or did notanswer correctly. The objective is to determine why you missed each question in order to avoid makingsimilar mistakes on the CMA exam.

Exam Tactics

The following tactical suggestions are to assist you in maximizing your score on the essay sectionof the CMA exam. Remember, knowing how to take the exam and how to answer individual questionsis as important as studying the subject matter tested on the exam.

1. Budget your time.

a. We make this point with emphasis. Just as you would fill up your gas tank prior toreaching empty, so too should you finish your exam before time expires.

b. You have at least 1 hour to answer multiple questions based on two essay scenarios.If you finished your multiple-choice section in less than the allocated 3 hours, yourremaining time will be carried over to the essay section and added to the 1-hourallocation.

c. If you begin the essays with 1 hour on the Time Remaining Clock, you should allocate30 minutes to each essay scenario, no matter how many questions it has. Eachscenario may have one, two, three, or four questions, but the ICMA has designed allscenarios to require approximately 30 minutes each and to count for the samenumber of points, regardless of the number of questions they contain. For thescenarios that contain more than one question, divide 30 minutes equally among thequestions (see below).

Example (assuming 1 hour on Time Remaining Clock):1 scenario with 1 question = 30 minutes

+1 scenario with 3 questions = 30 minutes (10 minutes per question)2 scenarios, 4 questions = 60 minutes (1 hour)

d. If you begin your essay section with more than 1 hour remaining, simply divide thetime you have left in half, and complete one essay scenario per half (see below).

Example (assuming 1 hour, 15 minutes on Time Remaining Clock):1 scenario with 1 question = 37 minutes

+1 scenario with 3 questions = 37 minutes (12 minutes per question)2 scenarios, 4 questions = 75 minutes (1 hour, 15 minutes)



e. Use your first sheet of scratch paper to prepare a Gleim Time Control Sheet (seebelow). Along the top of the sheet, write

Scenario Questions Time Start Finish Comments

Number the scenarios far enough apart to leave plenty of space for your notes. Oneof Prometric’s introductory screens will show each scenario with the number ofquestions and suggested time. Use this information to fill out the first three columnsin the Gleim Time Control Sheet (GTCS).

f. On your Prometric computer screen, the time remaining (starting with at least 1 hour)appears at the top right corner of your screen. Enter 60 (or more) on your GTCS.

Note that the image above is an example only. The number of questions per scenario willvary, as well as how much total time you have to spend (based on when you completedyour multiple-choice section). It is important to use a sheet of scratch paper as your GTCSto help you manage your time at the exam.

2. For each scenario, note the suggested time allocation (i.e., half your total time) andnumber of questions on your GTCS.a. Read requirements for each question carefully.

1) Focusing on what is required enables you to ignore extraneous information.b. Allocate your time spent per question associated with each scenario by dividing your

total time for that scenario equally among questions.c. On a separate sheet of scratch paper, outline the grading concepts for each of the

requirements. Plan on using one sheet for each scenario. Thus, you will needtwo additional sheets of scratch paper.

d. Type your answers to one question at a time.e. Proofread and edit.

3. Answer questions in sequential order.

a. Do not agonize over any one question or scenario. Stay within your time budget.b. As time permits, you can return to questions previously completed.

4. Time is precious. You will likely need the entire hour to answer all of the questions. Beprepared to stay at your Prometric computer for the entire time (i.e., no breaks).



5.4 SAMPLE ESSAY DIRECTIONS PAGE

Below is an estimate of what the essay directions will look like on your CMA exam. This estimateis based on information from the ICMA.



5.5 SAMPLE ESSAY QUESTIONS

The Gleim essay questions in the CMA Review books, Gleim Online, and Essay Wizard allow youto prepare for the essay section of the CMA exam under true exam conditions. Here are two examplesof essay scenarios that might appear on the CMA exam. Note that a scenario is presented first,followed by a question or questions based on the information given in the scenario. Remember, essayquestions are used on the exam to reflect a more “real-world” environment in which candidates mustapply the knowledge that they have learned. The answers to these essay questions are provided at theend of this study unit. Remember, you would allocate half of your total time on each scenario, eventhough each may contain a different number of questions.

Scenario for Essay Questions 1 and 2

Almost all major United States companies have production facilities and marketing outletsthroughout the world, and the pace of multinationalism has accelerated in recent years. By the early1970s, United States multinationals conducted one-quarter of the world’s merchandise export trade.During the period from 1999 to 2003, direct investment in the U.S. by foreign companies fluctuatedbetween about $50 billion and about $330 billion. Investment abroad by U.S. companies ranged fromabout $120 billion to about $255 billion. A few U.S. corporations have more than half of their assets inforeign countries. In aggregate terms, roughly 400 multinational enterprises produce perhaps as muchas one-third of the free world’s industrial output. Multinational corporations have wholly-owned foreignsubsidiaries, partially-owned foreign joint ventures, and/or patent and trademark licensing agreementsabroad. Some of the more sophisticated corporations have foreign research and development activitiesand multinational management organizations.

Questions

1. Describe the reasons why firms decide to become multinational.2. Identify and describe both the advantages and disadvantages of multinational corporations

from the point of view of thea. Home countryb. Host country



Scenario for Essay Questions 3, 4, and 5

RealTalk, Inc. manufactures specialized video-conferencing equipment. Production of specializedunits is generally performed under contract, while standard units are produced in accordance withmarketing projections. Maintenance of customer equipment is an essential service provided andaccounts for a significant portion of revenue. Recent economic conditions have caused a decline inRealTalk’s business. RealTalk’s Income Statement for the fiscal year just ended is below.

RealTalk, Inc.Income Statement ($000 omitted)For the Year Ended June 30, 2008

Equipment sales $6,000Revenue from maintenance contracts 1,800

Total sales $7,800Cost of goods sold 4,600Customer maintenance expense 1,000Selling expense 600Administrative expense 900Interest expense 150

Total expenses $7,250Income before income taxes 550

Income taxes 220Net income $ 330

RealTalk’s return on sales before interest and taxes was 9% for the year just ended, while theindustry average was 12%. The company’s total asset turnover was 3 times, and its return on averageassets before interest and taxes was 27%, both well below industry averages. To improve performanceand raise these ratios nearer to, or above, industry averages, the president of RealTalk has establishedthe following goals for the coming year: (1) 11% return on sales before interest and taxes, (2) 4 timestotal asset turnover, and (3) 35% return on average assets before interest and taxes.

To achieve these goals, RealTalk’s management team took into consideration the growinginternational video-conferencing market and proposed the following actions for the coming year:

● Increase sales prices for equipment by 10%.● Increase the cost of each unit sold by 3% for needed technology and quality improvements.● Increase maintenance inventory by $250,000 at the beginning of the year and add two

maintenance technicians at a total cost of $130,000 to improve customer service andresponse time. The increased inventory will be financed at an annual interest rate of 12%;no other borrowings or loan reductions are contemplated during the coming year. All otherassets will be held to the same levels as the year ended.

● Increase selling expenses by $250,000 but hold administrative expenses to the same levelas the year just ended.

It is expected that these actions will increase equipment unit sales by 6%, with a corresponding 6%growth in maintenance contracts.

Question

3. Prepare a pro forma income statement for RealTalk, Inc. for the fiscal year ending June 30,2009, on the assumption that the proposed actions are implemented as planned and thatthe increased sales objectives will be met. (Assume a 40% effective tax rate, and round allnumbers to the nearest thousand, i.e., $000 omitted.)

4. Determine if the president’s goals will be achieved by calculating the following ratios for theyear ended June 30, 2009: (a) Return on sales before interest and taxes, (b) Total assetturnover, and (c) Return on average assets before interest and taxes.

5. Discuss the limitations and difficulties that can be encountered in using ratio analysis,particularly when making comparisons to industry averages.



Essay Questions 1 and 2 -- Unofficial Answers

1. Most firms become multinational to expand markets and improve profit potential. Manymultinational firms began with efforts to secure national resources that were not available inthe home country. These firms were seeking long-term security rather than cost savings.Expansion into foreign markets often occurs where firms have a monopolistic advantageover the foreign competition. This advantage is associated with advanced technology,strong product differentiation, or economies of scale, and is frequently protected byproprietary knowledge or trademarks. Without these special advantages, the foreignerwould be at a disadvantage as local firms would be more familiar with local markets, laws,and customs. Because of import tariffs, high transportation costs, and national purchasingpolicies, firms frequently have difficulty increasing market share in foreign countries.Rather than contend with these barriers, firms establish production facilities and distributioncenters in the foreign countries, thereby overcoming economic disadvantages. To improvetheir competitive position, many firms establish foreign facilities to take advantage of lessexpensive resources.

2. a. The advantages of multinational corporations from the point of view of the countryinclude the following: Direct foreign investment often has a favorable balance ofpayments effect from profits, dividends, and patent royalties. While there may be aninitial transfer of capital abroad, this capital does not always come from the homecountry. In addition, many multinationals export components for assembly abroad,and these exports help the home country’s balance of payments. Multinationalspromote international trade, contribute to the effectiveness of international monetaryarrangements, and help maintain liberal trade policies. The profits and knowledgegained from foreign operations may be used to expand or improve home industries.The disadvantages of multinational corporations from the point of view of the homecountry include the following: Because the foreign investment of some multinationalsreplaces exports from the home country, there is a negative effect on the balance ofpayments. When factories are built abroad, jobs are exported, and corporations havethe option of moving additional operations out of the country. Multinationalism maygive a corporation certain advantages in its home market that purely domestic rivalscannot match. The advantages include vertical integration, the spreading of jointcosts over many markets, and the use of foreign profits to boost the home marketposition. Multinationals may be subject to the risk of foreign expropriation of assets.

b. The advantages of multinational corporations from the point of view of the host countryinclude: Multinationals can promote economic development and prosperity in thehost country. The infusion of capital can mobilize host country resources, boostingoutput and efficiency. Expanding exports improve the host country’s balance ofpayments. The introduction of new technology by multinationals saves less-developed countries the costs of developing technology and adds to the country’sproductive capabilities. Local employment usually increases and results in animproved standard of living. Multinationals provide training for skilled workers andmanagers.The disadvantages of multinational corporations from the point of view of the hostcountry include the following: Multinationals may contribute to a net capital outflow inthe host country as profits are repatriated and royalties are paid. Capital outflowproblems can be aggravated by arbitrary transfer prices among multinationalsubsidiaries. This is done to move profits to those countries where taxes are low orto evade laws restricting repatriation of profits. Multinationals may causeinappropriate technology to be introduced. Most advanced technology is capital-intensive and labor-saving, and may not be in the best interests of less-developedcountries where labor is abundant.



Essay Questions 3, 4, and 5 -- Unofficial Answers

3. RealTalk Inc.Pro Forma Income Statement

For the Year Ending June 30, 2009($000 omitted)

Equipment sales ($6,000 × 1.06 × 1.10) $6,996Maintenance contracts ($1,800 × 1.06) 1,908

Total sales $8,904Cost of goods sold ($4,600 × 1.03 × 1.06) 5,022Customer maintenance expense ($1,000 + $130) 1,130Selling expense ($600 + 250) 850Administrative expense 900Interest expense [$150 + ($250 × .12)] 180

Total expenses $8,082Income before taxes 822

Income taxes ($822 × .4) 329Net income $ 493

4. Return on sales before interest and taxes = EBIT ÷ Sales= ($493 + $329 + $180) ÷ $8,904= 11.25%; exceeds 11% goal

Total asset turnover = Sales ÷ Average assets= $8,904 ÷ (2004 turnover + $250)= $8,904 ÷ [($7,800 ÷ 3) + $250]= $8,904 ÷ ($2,600 + $250)= 3.12 times; does not achieve 4 times

Return on average assets before interest and taxes = EBIT ÷ Average assets= ($493 + $329 + $180) ÷ ($2,600 + $250)= 35.16%; exceeds 35% goal

5. Identical companies may use different valuation or expense methods, making comparabilitydifficult. Special circumstances not encountered by the industry may be the cause ofdeviation from the industry. A blend of techniques should be used with ratio analysis whenmaking comparisons to the industry.



STUDY UNIT SIX

PREPARING TO PASS THE CMA EXAM


6.1 Control: How To Be In . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496.2 Applying for the Exam: How Many Parts to Take and When to Apply . . . . . . . . . . . . . . . . . 506.3 How Good Is Good Enough? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516.4 Notecards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516.5 Self Study vs. Group Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516.6 Time Allocation and Study Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526.7 When to Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526.8 Where to Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536.9 Order of Studying Parts and Study Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536.10 How to Study a Study Unit Using the Gleim Review System . . . . . . . . . . . . . . . . . . . . . . . . 536.11 CMA Gleim Online . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546.12 Gleim Essay Wizard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546.13 Gleim Books and Test Prep Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556.14 Gleim Audio Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566.15 CMA Examination Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Preparing to sit for the CMA exam requires planning and control, i.e., a control system. This studyunit suggests study and preparation procedures to maximize your test scores.

6.1 CONTROL: HOW TO BE IN

You have to be in control to be successful during exam preparation and execution. Control is aprocess that we use in all our activities, implicitly or explicitly. The objective is to improve performanceas well as be confident that the best possible performance is being generated. Control is a processwhereby you

1. Develop expectations, standards, budgets, and plans.2. Undertake activity, production, study, and learning.3. Measure the activity, production, output, and knowledge.4. Compare actual activity with expected and budgeted activity.5. Modify the activity, behavior, or study to better achieve the desired outcome.6. Revise expectations and standards in light of actual experience.7. Continue the process or restart the process in the future.

Most accountants study this control process in relation to standard costs, i.e., establish coststandards and compute cost variances. Just as it helps them in their jobs, the control process will helpyou pass the CMA exam.

Every day, you rely on control systems implicitly. For example, when you groom your hair, youhave expectations about the desired appearance of your hair and the time required to style it. Youmonitor your progress and make adjustments as appropriate, e.g., brush it a different way or speed up.The control process, however, is applicable to all of your endeavors, both professional and personal.You should refine your personal control processes specifically toward passing the CMA exam.

In this booklet, we suggest explicit control systems for

1. Preparing to take the CMA exam.2. Studying an individual Gleim study unit.3. Answering individual multiple-choice questions.4. Answering individual essay questions.5. Taking each of the two parts of the CMA exam.

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Unless you are a natural at something, most endeavors will improve with explicit control. This isparticularly true with the CMA exam.

1. Develop an explicit control system over your study process.

2. Practice your question-answering techniques (and develop control) as you prepare solutionsto practice questions/problems during your study program.

3. Plan to use the Gleim Time Management System (explained in Study Unit 7, Subunit 15) atthe exam.

Being in control is fun because you feel good when you have done your best.

Before continuing, stop and think about situations you had under control versus those situationswhere you were not in control. Notice the similarity of being prepared and being in control. When youare prepared, you know what to expect and what to do! Preparation is the key to success on theCMA exam: knowing what to expect and what to do to pass the exam! Control is exactly whatCMA Review: A System for Success and the other components of the Gleim Knowledge TransferSystem™ give you. As you study Study Units 1 through 7 in this booklet, relate what you are studyingto the five steps on page i. You can and will be successful on the CMA examination.

6.2 APPLYING FOR THE EXAM: HOW MANY PARTS TO TAKE AND WHEN TO APPLY

Our most successful candidates take one part of the exam at a time. Once a candidate takes onepart, (s)he should immediately begin studying for the next part with the goal of taking it during the nextavailable testing window. There is a savings on exam registration fees if a candidate can take bothparts in one window – one at the beginning and one at the end. For example, if you register onDecember 15, 2011, you will be eligible to schedule your exam in the January/February 2012 testingwindow. You can take Part 1 in early January and still have plenty of time to adequately prepare totake Part 2 by the end of February.

Before registering for and scheduling your exams, contact the Gleim Personal Counselors for arecommended study schedule to assist with your exam goals (see Subunit 6.6). For a list of the Gleimstudy units in each part, see the Preface. See Study Unit 2 for the ICMA Content Specification Outlinesfor each part.

CMA Part 1: Financial Planning, Performance, and ControlCMA Part 2: Financial Decision Making

Candidates can maintain credit for passed parts as long as they maintain continuous candidacy.“Continuous candidacy” includes IMA membership, and candidates must pass both parts of the examwithin 3 years.

After studying Study Unit 1 of this booklet and understanding the requirements and procedures forapplying, decide when you will take the exam. Be sure to complete your registration applicationcorrectly. If information is incorrect or missing, the application will be returned and you may not havetime to resubmit it. Also, be very careful to specify which part(s) you are taking.

Both Parts 1 and 2 are offered in three testing windows: January/February, May/June, andSeptember/October. Register at least 6 weeks before the time you wish to take the exam. Registrationfor Parts 1 and 2 received on or after February 16, June 16, or October 16 will be authorized for anyfuture testing window (i.e., not the current window, but the next window or later). For example, if youregister for a part on February 16, 2012, the earliest you can take the exam is May 1, 2012.Registrations received before those dates will be authorized for any window, including the current one.See the table below.

If you register duringThe earliest you can takeyour exam is

October 16-February 15 January/FebruaryFebruary 16-June 15 May/JuneJune 16-October 15 September/October

50 SU 6: Preparing to Pass the CMA Exam


When you register for an exam part, you will be sent authorization to take the exam in a testingwindow based on the date on which you registered (see Study Unit 1, Subunit 12).

6.3 HOW GOOD IS GOOD ENOUGH?

An issue facing all CMA candidates is how well they need to perform to pass the CMA exam. Werecommend that you develop your proficiency so that you are scoring a minimum of 75% on each studyunit’s multiple-choice questions. You may wish to establish a personal goal somewhat higher or lower,depending on your background and knowledge of the topic. Your personal standards may also vary byexam part. Identify your goals and stay on track until they are achieved. When you take the exam, doyour best on every question within the time budgeted. Remember that a relatively small percentage ofcandidates pass each part. Thus, it is imperative that you do your best on each part of the exam andevery question in each part.

6.4 NOTECARDS

Some concepts, definitions, and lists require memorization for the CMA exam. If you decide to usenotecards, consider our suggestions on how to get the most out of them.

As you encounter concepts needing memorization, write the name of the list, definition, concept,etc., on the front of your notecard. Use the back to list items, explanations, summary, etc.

In the back of each CMA book is a Content Specification Outline, which represents what will becovered on the exam. Use this list as a guideline for creating your notecards. A good method to use isto write one concept that needs to be memorized per subunit. Some subunits may have more than oneconcept that you need to memorize, while others contain concepts that you already know. Use yourjudgment in effectively tailoring your notecards to your needs.

Some suggest that, if you hold your notecards up in the air, just above eye level, you will improverecall of the information on your notecards. This method is based on the observation that when you arestruggling for an answer, you tend to glance up. If you held up your cards as you studied, that glancewill trigger recall of what was on the card.

Also, you may wish to do a summary notecard of each of the steps to exam success. Write asummary in your own words so you understand the core concepts. You may also wish to do a fewnotecards for each Gleim study unit that you complete.

6.5 SELF STUDY VS. GROUP STUDY

Candidates are exposed to a wide variety of CMA review books, study aids, and review courses toassist them in preparing for the CMA exam. This CMA Review: A System for Success is a goodstart and should be followed with the Gleim CMA Review System.

CMA review assistance can be divided into self study and group study. Group study is assemblingwith others to obtain the benefit of an instructor or other teaching technology and/or interaction withother CMA candidates. Self study can be based on textual materials, computer CD-ROM, audio and/orvideo reviews and, as in the Gleim system, frequent use of a combination of these materials.

Self Study Group StudyBooksOther textual materialAudio reviewsVideotapesComputer softwareOnline courses

Live instructionAudio instructionVideotape instruction

SU 6: Preparing to Pass the CMA Exam 51


The ideal situation that we recommend is group study with Gleim Professor-Led Live Review. Thisprogram provides personalized and individual attention with a group dynamic. On the other hand, if youare considering group study in which you listen to audio lectures or watch videotapes at a hotel or otherpublic place, consider instead spending $739.95 for the Gleim CMA Review System and studying in theconvenience and comfort of your own home. Most firms who reimburse course expenses will pay forGleim review materials instead of or possibly in addition to a group study course. Save commutinginconvenience, costs, and time.

Learning is an individual activity. If you have the necessary self-discipline, you can learn a lot onyour own. Reflect on how much you have already learned about the CMA exam by studying thisbooklet. You are becoming an expert on the nature and subject matter of the CMA exam. You will bein control of the subject matter tested and the examination process when you take the CMA exam. Itwill be fun because you will be proud of doing your best while preparing for and taking the CMA exam.

6.6 TIME ALLOCATION AND STUDY PLAN

The Gleim CMA Review program consists of 10 study units for each exam part, or a total of20 study units for both parts of the exam. Complete one study unit at a time. If you spend about5 hours per study unit, you will invest about 50 hours per exam part. Add 8 hours (broken up becauseyou will refer to each study unit as you need it) to study Study Units 1 through 7 in this CMA Review:A System for Success booklet. Add another 10-20 hours for taking customized tests on problem areasas a cumulative review.

Different people will be able to study for different amounts of time per week. For example, if youare able to dedicate yourself to studying for 15 hours a week, you will complete all 10 study units in onepart, plus a cumulative review of your weak areas, in 5 weeks. Your completion rate will depend onyour personal circumstances (e.g., how familiar you are with the material, your level of education,elapsed time since your degree was earned, how much time you have available to study, how long youcan concentrate in one sitting, etc.). Speak to a Gleim Personal Counselor to obtain help in preparing astudy schedule that is right for you! Call (800) 874-5346 or email [email protected].

Each week, you should evaluate your progress and review your preparation plans for the timeremaining prior to the exam. Use a calendar to note the exam dates and the weeks to go before theexam. Marking a calendar will facilitate your planning. Review your commitments, e.g., out-of-townassignments, personal responsibilities, etc., and note them on your calendar to assist you in keeping toyour schedule.

6.7 WHEN TO STUDY

At what times of the day are you the most productive? Do you need a specified study schedule?How disciplined are you? How are you going to control your study process?

Many people are most productive early in the morning when they are rested. Many candidates find4-6 or 5-7 in the morning a productive time to study because they are fresh and usually not disturbed.Additionally, they do their CMA review first each day before everything else, not later as a last priority.Also, studies have shown that students who study early in the morning cover more subject matter inless time and retain more. The mind is clearer after sleep and able to internalize information in a waythat is more accessible for recall.

You should study when you study best. Unfortunately, other activities compete for your time. Lackof time is your enemy, and preparing for the CMA exam takes a considerable amount of quality studytime. This effort requires a substantial personal commitment.



Determine what time-consuming activities you can temporarily give up or defer until after theCMA exam. Something has to give if your schedule is already full before you begin your studyprocess. Recall that there are 168 hours in a week (7 × 24), of which you work and commute 50 to60 hours and sleep 50 to 60 hours, which leaves only 50 to 60 hours for personal, family, professional,and study endeavors. You should commit 10 to 20 hours per week to CMA exam preparation based onyour circumstances.

Set up a regular schedule with the objective of completing a certain amount of work (based on yourstudy schedule) at one sitting. This will give you a feeling of accomplishment. Plan exactly what youwill accomplish before you begin, and be proud of yourself when you achieve your study goals!

6.8 WHERE TO STUDY

Study wherever you can concentrate. The Gleim CMA Review System is extensive because it iscomplete. However, it is presented in two separate books, with Test Prep Software, Test Prep forWindows Mobile, Gleim Online, Essay Wizard, and Audio CDs for your convenience. Home, work,public transportation, hotels, motels, libraries, and restaurants are all possible study areas.

If you study early in the morning, you can study in your kitchen, living room, or wherever you havea table or desk. Try to find study areas that are quiet, well lit, and free of distractions.

6.9 ORDER OF STUDYING PARTS AND STUDY UNITS

Once you have determined which part you will study first, complete study unit after study unit insequential order. Remember that you will never be completely prepared AND you may have to go onto the next study unit with a 75% (or less) correct response rate on multiple-choice questions. Stay onschedule and focus on a reasonable and attainable objective: PASSING!

Which part should you study first and second? Whatever you feel good about works fine. If youwant to go from the part in which you are more confident to the one in which you are less confident,fine! Most important is for you to set up a plan and IMPLEMENT your plan. If you purchase theGleim CMA Review System, you can also speak with your Personal Counselor about the order that isbest for you.

6.10 HOW TO STUDY A STUDY UNIT USING THE GLEIM REVIEW SYSTEM

To ensure that you are using your time effectively, we recommend that you follow the steps listedbelow and on the next page when using all of the materials together (books, Test Prep Software,Test Prep for Windows Mobile, Audio CDs, Gleim Online, and Essay Wizard):

1. (30 minutes, plus 10 minutes for review) In the Gleim Online course, complete Multiple-Choice Quiz #1 in 30 minutes (excluding the review session). It is expected that yourscores will be low on the first quiz.a. Immediately following the quiz, you will be prompted to review the questions you

marked and/or answered incorrectly. For each question, analyze and understandwhy you were unsure or answered it incorrectly. This step is an essential learningactivity.

2. (30 minutes) Use the audiovisual presentation for an overview of the study unit. The GleimCMA Review Audio CDs can be substituted for audiovisual presentations and can be usedwhile driving to work, exercising, etc.

3. (45 minutes) Complete the 30-question True/False quiz. It is interactive and most effective ifused prior to studying the Knowledge Transfer Outline.



4. (60 minutes) Study the Knowledge Transfer Outline, particularly the troublesome areasidentified from the multiple-choice questions in the Gleim Online course. The KnowledgeTransfer Outlines can be studied either online or from the books.

5. (30 minutes, plus 10 minutes for review) Complete Multiple-Choice Quiz #2 in the GleimOnline course.a. Immediately following the quiz, you will be prompted to review the questions you

marked and/or answered incorrectly. For each question, analyze and understandwhy you were unsure or answered it incorrectly. This step is an essential learningactivity.

6. (60 minutes) Complete two 20-question quizzes while in Test Mode from the CMA Test PrepSoftware or Test Prep for Windows Mobile.

7. (30 minutes) Complete the essay scenario in Gleim Online.8. (60 minutes) Practice the additional essay scenarios in the Essay Wizard.

When following these steps, you will complete 10 units in about 60 hours. Then spend about10-20 hours using the CMA Test Prep Software or Test Prep for Windows Mobile to create customizedtests for the problem areas that you identified. To review the entire part before the exam, use theCMA Test Prep Software or Test Prep for Windows Mobile to create 20-question quizzes that drawquestions from all the study units. Continue taking 20-question quizzes until you approach your desiredproficiency level, e.g., 75%+.

6.11 CMA GLEIM ONLINE

CMA Gleim Online is a versatile, interactive, self-study review program delivered via the Internet.It is divided into one course for each part of the CMA exam, priced at $249.95 per part.

Each course is divided into 10 individual, manageable study units. Completion time per study unitwill be about 5 hours. Each study unit in the course contains an audiovisual presentation, 30 true/falsestudy questions, 10-20 pages of Knowledge Transfer Outlines, two 20-question multiple-choicequizzes, and an essay scenario.

CMA Gleim Online provides you with a Personal Counselor who will provide support to ensureyour competitive edge. CMA Gleim Online is a great way to get confidence as you prepare with Gleim.This confidence will continue during and after the exam.

6.12 GLEIM ESSAY WIZARD

The Gleim Essay Wizard is a training program that focuses on the essay questions appearing onPart 1 and Part 2 of the CMA exam. These online courses provide 20 essay scenarios, containing1-4 questions, for each part of the CMA exam, as well as test-taking tips from Dr. Gleim to help you bein control.



6.13 GLEIM BOOKS AND TEST PREP SOFTWARE*

Twenty-question tests in the CMA Test Prep Software or Test Prep for Windows Mobile will helpyou to focus on your weaker areas. Make it a game: How much can you improve?

Our CMA Test Prep Software forces you to commit to your answer choice before looking atanswer explanations; thus, you are preparing under true exam conditions. It also keeps track of yourtime and performance history for each study unit, which is available in either a table or graphical format.

Simplify the exam preparation process by following our suggested steps listed below. DO NOTomit the step in which you diagnose the reasons for answering questions incorrectly; i.e., learn fromyour mistakes while studying so you avoid making similar mistakes on the CMA exam.

1. In test mode, answer a 20-question diagnostic test from each study unit before studying anyother information.

2. Study the Knowledge Transfer Outline for the corresponding study unit in your Gleim book.Place special emphasis on the weaker areas that you identified with the initial diagnosticquiz in Step 1.

3. Take two or three 20-question tests in test mode after you have studied the KnowledgeTransfer Outline.

4. Immediately following the quiz, you will be prompted to review the questions you markedand/or answered incorrectly. For each question, analyze and understand why youanswered it incorrectly. This step is an essential learning activity.

5. Continue this process until you approach a predetermined proficiency level, e.g., 75%+.6. Modify this process to suit your individual learning process.

a. Learning from questions you answer incorrectly is very important. Each question youanswer incorrectly is an opportunity to avoid missing actual test questions on yourCMA exam. Thus, you should carefully study the answer explanations provided untilyou understand why the original answer you chose is wrong, as well as why thecorrect answer indicated is correct. This study technique is clearly the differencebetween passing and failing for many CMA candidates.

b. Also, you must determine why you answered questions incorrectly and learn how toavoid the same error in the future. Reasons for missing questions include:1) Misreading the requirement (stem)2) Not understanding what is required3) Making a math error4) Applying the wrong rule or concept5) Being distracted by one or more of the answers6) Incorrectly eliminating answers from consideration7) Not having any knowledge of the topic tested8) Employing bad intuition when guessing

c. It is also important to verify that you answered correctly for the right reasons.Otherwise, if the material is tested on the CMA exam in a different manner, you maynot answer it correctly.

d. It is imperative that you complete your predetermined number of study units per weekso you can review your progress and realize how attainable a comprehensive CMAreview program is when using Gleim CMA Review System. Remember to meet orbeat your schedule to give yourself confidence.

*Note: Gleim does not recommend studying for the CMA exam using only book and Test Prep. Candidates needto practice essays in an exam environment, which means on a computer.



6.14 GLEIM AUDIO REVIEW

Gleim CMA Review audios provide an average of 30 minutes of quality review for each study unit.Each review provides an overview of the outline for each study unit in the CMA Review book. Thepurpose is to get candidates “started” so they can relate to the questions they will answer beforereading the study outlines in each study unit.

The audios get to the point, as does the entire Gleim System for Success. We are working to getyou through the CMA exam with minimum time, cost, and frustration. You can listen to two shortsample audio reviews on our website at www.gleim.com/accounting/demos/.

6.15 CMA EXAMINATION CHECKLIST

1. Become knowledgeable about the exam, and determine which part of the exam you will takefirst.

2. Purchase the Gleim CMA Review System (including books, Test Prep Software, Test Prepfor Windows Mobile, Audio CDs, Gleim Online with your Personal Counselor, and EssayWizard) to thoroughly prepare for the CMA exam.

3. Communicate with your Personal Counselor to design a study plan that meets your needs.Call (800) 874-5346 or email [email protected].

4. Apply for membership in the IMA and the certification program. Register to take thedesired part of the exam using the examination registration form and send it with yourapplication to the ICMA.

5. Upon receipt of authorization to take the exam, contact Prometric to schedule your test.6. Work systematically through each study unit in the Gleim CMA Review System.7. Sit for and PASS the CMA exam while you are in control. Gleim Guarantees Success!8. Enjoy your career and recommend Gleim to others who are also taking these exams. Stay

up-to-date on your Continuing Professional Education Requirements with Gleim CPE.



STUDY UNIT SEVEN

HOW TO TAKE THE CMA EXAM


7.1 A Positive Mental Attitude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577.2 Exam Site Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587.3 Staying in a Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587.4 What to Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587.5 Eating and Physical Comfort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587.6 What to Take to the Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597.7 Taking the CMA Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597.8 Prometric Test Center Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597.9 Prometric Test Center Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607.10 Calculators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607.11 CMA Candidate Misconduct and Cheating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617.12 Checking in at the Exam Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637.13 Beginning Your Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637.14 Computer Problems at the Exam Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637.15 Time Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

As you take each part of the CMA exam, you will be in control as a result of your preparationprocess. This study unit addresses what to expect and how you should plan to conduct yourself duringthe exam. Convince yourself that exam focus, examination strategies, and a control system for takingeach part of the CMA exam will assure that you maximize your exam scores.

The purpose of this study unit is to focus on what to expect and how to react. You have to be betterthan most of your peers taking the exam because the pass rate on the CMA exam historically has beenrelatively low. To the extent you know more about the exam process, you will have more confidenceand control and will perform better. Re-examination candidates: You have already experienced theexam process but were not successful. Please study this study unit carefully to help you refine yourexam execution!

This study unit includes a general explanation of examination site instructions, rules, andprocedures. You have to be prepared as to what to expect so you are not distracted from your missionof passing the exam!

7.1 A POSITIVE MENTAL ATTITUDE

Being in control is fun, and you are in control with the Gleim CMA Review. Enjoy your competitiveadvantage, which is based upon a systematic, thorough review of all material tested on the CMAexam. It is not hit or miss. The Gleim method does not involve guessing about what will appear on thenext CMA exam. You will be prepared for any and all questions. If a question appears difficult toyou, it will be more difficult for other candidates.

You are doing your best. No one can ask for more. Be proud. You are exercising leadership skillsby planning your preparation program for the CMA exam and then adjusting those plans as part of yourcontrol process.

You will do the same thing when you take the exam: YOUR BEST. Again, no one can ask formore.

57


7.2 EXAM SITE LOCATION

Prometric exam sites vary in how they are operated. For example, some professionals havelearned that the Gainesville, Florida, Prometric site is well run, organized, quiet, etc., and drive250 miles to Gainesville to take their examinations.

Also make sure you know where the exam site is and how to get there. Some Prometric centersare in hard-to-find locations. Note that some are part of Sylvan Learning Centers.

Talk to someone who took an exam at the site you plan to use. Ask him/her for information aboutthe site and for any suggestions (s)he might have. Seek answers to any questions that come to mindwhile you read this study unit and/or prepare for the exam. The objective is to know as well as possiblewhat to expect. Remember, always expect the unexpected and be prepared to deal with it.

7.3 STAYING IN A HOTEL

If it is not convenient to drive to the exam site from home on test day, consider reserving a hotelroom near the exam site. The objective is to avoid distractions and provide complete control over yoursleep and study schedule. Make sure the hotel suits you and you will feel good about staying there.Look at the rooms. Do they have a desk or table for study? Are the beds, pillows, etc., comfortable?Are restaurants, room service, exercise opportunities, and swimming pools available? Is late checkoutavailable? Is the hotel near a noisy road or intersection?

Schedule your meals, beverages, and exercise to maximize your rest. After months of reviewand study, the best method to obtain maximum points is a great night of sleep. Use both an alarmclock and a wake-up call to ensure that you get up on time. You may want to take your own alarmclock.

Provide adequate time to bathe, dress, eat, check out of the hotel, and get to the exam site. Donot get up too early to try to cram because you may become frustrated. You want to wake up feelinggood and being in control so you will stay in control all day!

7.4 WHAT TO WEAR

Wear comfortable clothes. Sweats, shorts, and jeans are very appropriate. Wear several layersso you can add or remove shirts and sweaters. (Should you remove any outerwear, you will be askedto place the clothing in one of the storage lockers at the test center; remember to take it with you whenyou leave.) Generally, wear what you wear when you are most comfortable studying. Remember thatcoats, umbrellas, books, purses, and attache cases are not allowed in the testing room and are onlyaccommodated at the exam site through the use of a small locker. Thus, you should not takesomething that you do not want to lose. Have an umbrella, raincoat, or other special clothing availablein your nearby hotel or car, as appropriate.

7.5 EATING AND PHYSICAL COMFORT

Your physical comfort during the exam can be affected by what you choose to eat prior to theexam. The proper foods can give you the energy to get through the exam with a clear head. Considerthe following:

1. Choose foods with complex carbohydrates (such as breads, rice, and vegetables) forsustained energy. Avoid chocolates and sweets that produce quick highs and lows intemperament during the exam.

2. Avoid stimulants or depressants that could alter your thinking.3. Don’t rush your meal or choose foods that are not easily digested (fast food).

Remember, your goal is a clear, focused mind and a positive mental attitude.

58 SU 7: How to Take the CMA Exam


7.6 WHAT TO TAKE TO THE EXAM

Prometric will NOT allow you to bring anything into the exam room. Be prepared to have a drinkduring breaks. See Prometric rules, regulations, etc., in the following subunits.

Do not bring any study notes or materials to the exam on your person, e.g., in pockets. If anysuch notes fall out of your pocket during the exam, you will be accused of cheating. The exam proctorand exam administration system are focused on preventing any cheating.

7.7 TAKING THE CMA EXAM

A few days prior to taking your exam, call your Prometric Testing Center and confirm yourappointment; leave as little as possible to chance.

Plan on getting to the testing site about 30-60 minutes ahead of your appointment time. Leave allstudy materials in your car or at home. Prometric asks that you arrive 30 minutes early, but they mayask you to wait up to 30 minutes to start your test. If you have to wait, relax in your car or outside.Avoid tensing up.

7.8 PROMETRIC TEST CENTER RULES

1. You must arrive at the test center at least 30 minutes before your scheduled appointment.If you arrive after your scheduled appointment time, you may forfeit your appointment andnot be eligible to have your examination fees refunded. When you arrive, turn off all cellphones, beepers, audio alarms on watches, and personal digital assistants.

2. Your examination should begin within thirty minutes of the scheduled start time. Ifcircumstances arise that delay your session more than thirty minutes, you will be given thechoice of continuing to wait or rescheduling your appointment.

3. You must place any personal belongings, such as a purse or cell phone, in the storagelockers provided by the test center. You will be given the key to your locker, which must bereturned to the test center staff when you leave. The lockers are very small and are notintended to hold large items. Do not bring anything to the test center unless it is absolutelynecessary.

4. You are required to present either a valid passport or two other original forms of non-expiredidentification, one with a photograph, both with your signature. Approved photo IDs are adriver’s license, military ID, national country ID card, credit card with photo, bank debit cardwith signature, or company ID. Student IDs and Social Security cards are not acceptable.You must keep your identification with you at all times. If you leave the testing room for anyreason, you will be required to show your identification to be readmitted. You will not bepermitted into the examination without proper identification.

5. You will be required to sign the Prometric log book when you enter the center.6. You will be escorted to a workstation by test center staff. You must remain in your seat

during the examination, except when authorized to get up and leave the testing room bytest center staff. You may take breaks if you wish, but remember: The clock will not stopwhile you are away!

7. Candidates will be provided with up to four total booklets of scrap paper, which will behanded out by the test center personnel one or two at a time. Candidates are onlypermitted to have two booklets at any given time. The booklets will be collected fromcandidates at the end of the testing session. Pencils are provided by the testing center.

8. You may choose which kind of calculator you would like to bring from three specific choices.See the next page for a more complete description of allowable calculators.

SU 7: How to Take the CMA Exam 59


9. Raise your hand to notify the test center staff ifa. You experience a problem with your computerb. An error message appears on the computer screen (do not clear the message)c. You need additional scratch paper or pencilsd. You choose to take a break (testing time will not be suspended)e. You need the test center staff for any other reason

10. When you finish the examination, quietly leave the testing room, turn in your scratch paper,and sign the test center log book. The test center staff will dismiss you after completing allnecessary procedures.

7.9 PROMETRIC TEST CENTER REGULATIONS

A standardized environment is necessary to ensure that the examination you take is essentiallyequivalent to the examination all other candidates take. For this reason, all candidates must follow thesame regulations.

● Papers, books, food, or purses are not allowed in the testing room.● Eating, drinking, or use of tobacco is not allowed in the testing room.● Calculators (see Subunit 7.10 for exceptions), personal digital assistants, or other computer

devices are not allowed in the testing room.● Communication devices (e.g., cell phones, pagers, beepers, wireless Internet connections to

personal digital assistants) are not allowed in the testing room.● Recording devices (audio and video) are not allowed in the testing room.● You must not leave the testing room without the permission of the test center staff.● You must show your identification to the staff to re-enter the room after any breaks.● You may not access your locker during any break.

7.10 CALCULATORS

Simple six-function calculators are permitted (i.e., addition, subtraction, multiplication, division,square root, percent). Alternatively, candidates may choose to bring either a Texas Instruments BAIIPlus or a Hewlett Packard 10bII calculator. Feedback from candidates who have already taken at leastone part of the exam using only the six-function calculator, however, has shown that the simplercalculator will suffice for the CMA. Candidates should rest assured that time value tables are availablefor use on questions that demand them.

Candidates are responsible for providing their own calculators. You should be thoroughlyexperienced in the operations of your calculator. Make sure it has fresh batteries just prior to theexamination.

1. Consider bringing a backup calculator with you.2. The calculator must be small, quiet, and battery- or solar-powered so it will not be distracting

to other candidates.3. The calculator may have a memory. However, the memory must be temporary and erase

when the memory is cleared or the calculator is turned off.4. The calculator must not use any type of tape.5. The calculator must be nonprogrammable.6. Nonconforming calculators and calculator instruction books are not permitted.



7. We suggest that you study using the calculator that you will be bringing to the exam so thatyou are completely comfortable using it.

BAII Plus 10bII

7.11 CMA CANDIDATE MISCONDUCT AND CHEATING

If the test center staff suspects misconduct, the grounds for issuing a warning to candidatesinclude

● Communicating, verbally or otherwise, with another candidate or person (excludinggreetings or courtesies);

● Copying from or looking at another candidate’s materials or workstation;● Allowing another candidate to copy from or look at materials or workstation;● Giving or receiving assistance in answering examination questions or problems;● Reading examination questions or Simulations aloud;● Engaging in conduct that interferes with the administration of the examination or

unnecessarily disturbing staff or other candidates.Grounds for confiscation of a prohibited item and warning the candidate include

● Possession of any prohibited item (whether or not in use) inside or while entering or exitingthe testing room;

● Use of any prohibited item during a break in a manner that could result in cheating or theremoval of examination questions or simulations.



Prohibited items include● Book● Briefcase● Calculator/portable computer● Calculator watch● Camera, photographic or scanning device (still or video)● Cellular phone● Cigarette/tobacco product● Container of any kind● Dictionary● Earphone● Earplug (not provided by Test Center)● Eraser● Eyeglass case● Food or beverage● Handbag/backpack/hip pack● Hat or visor (except head coverings worn for religious reasons)● Headset (not provided by Testing Center)● Newspaper or magazine● Non-prescription sunglasses● Notebook● Notes in any written form● Organizer/day planner● Other electronic or mechanical device● Outline● Pager/beeper● Paper (it is provided by Test Center)● Pen/pencil (it is provided by Test Center)● Pencil sharpener● Plastic bag● Purse/wallet● Radio/transmitter/receiver● Ruler/slide ruler● Study material● Tape/disk recorder or player● Umbrella● Weapon of any kind

In addition, unless inspected by staff at check-in, prohibited items include jewelry, a jacket, or asweater. For example, if you require a separate sweater or a jacket due to room temperature, orchoose to wear certain jewelry (a pendant necklace or large earrings that could conceal an electronic orother device), the item must be checked by test center staff for possible concealment of otherprohibited items prior to allowing it into the testing room.



7.12 CHECKING IN AT THE EXAM SITE

When you arrive at the computer testing center, you will be required to check in with your ID andsign the log book. Be sure to bring your authorization letter and appropriate identification. If you haveany questions, please call the ICMA at (800) 638-4427.

Next, you will be taken into the testing room and seated at a computer terminal. You will beprovided with pencils and scrap paper. You are permitted to use an accepted calculator (seeSubunit 7.10). A person from the testing center will assist you in logging onto the system, and you willbe asked to confirm your personal data. Then you will be prompted and given an online introduction tothe computer testing system, and you will view a tutorial.

If you have used our CMA Test Prep Software and/or Gleim Online, you will be conversant with thecomputer testing methodology and environment, and you may want to skip the tutorial and begin theactual test immediately. Once you begin your test, you will be allowed 4 hours to complete the actualtest (3 hours for multiple-choice, 1 hour for essays). We suggest you allocate 1.5 minutes per questionto give yourself time to review. You may take a break during the exam, but the clock continues to runduring your break. Before you leave the testing center, you will be required to check out of the testingcenter.

7.13 BEGINNING YOUR EXAM

After you check in with your ID, you will be escorted to a computer station. There will becandidates taking many different exams in the room with you (financial exams, medical exams, etc.)

Prometric will provide you with an opportunity to view an abbreviated exam introduction. Workthrough it so you do not miss anything. As you begin the exam, you will do fine because you haveexperienced the Gleim Prometric look-alike screens.

7.14 COMPUTER PROBLEMS AT THE EXAM SITE

There is about one chance in 100 that you will encounter a computer problem at the exam site.The most common problem requires staff to reboot your computer. At most you will lose a minute oftesting time, according to Prometric. If you have a computer problem, stop and tell/show the examproctor. Do NOT erase any messages on the screen. Do NOT attempt to circumvent or fix thesystem. It is a Prometric problem. Note the time it occurred and when it is rectified for your appropriateuse in the future.

Please report all computer problems in detail to Gleim by emailing [email protected].

Minimize your risk of computer problems by practicing your use of the Prometric look-alikecomputer screens in CMA Gleim Online.



7.15 TIME MANAGEMENT

A major issue on the CMA exam is time management. The only help you get is hours, minutes,and seconds remaining in your test with no guidance for breaks or time allocation within each section.

We have prepared a Gleim Time Management System that will work for both parts of the exam.You have to budget 3 hours for 100 multiple-choice questions and at least 1 hour (more if you finishedyour multiple-choice early) for two essay scenarios with 1-4 questions each. Recall that you cannot goback to the multiple-choice section once you have moved on to essays.

The key to success is to become proficient in (1) answering multiple-choice questions at a rate of1.5 minutes per question and (2) answering an essay scenario in half of your time remaining regardlessof how many questions it contains.

1. Here is our suggestion for successfully managing your time on the CMA exam:Multiple-choice section: 100 questions @ 1.5 minutes per question 150 min.

Review of unanswered, marked questions 15 min.Section complete in 165 minutes, leaving 15 minutesto carry over to essay section

Essay section: 60 min. standard time allocation + 15 min. 75 min.1 scenario with 1 question 37 min.1 scenario with 3 questions 37 min.

(Per question 12 min.)Section complete in about 75 minutes

2. Since the computer screen shows hours:minutes:seconds remaining, you need to focus onthe hour:minutes, NOT time on your watch or minutes. Throughout your practice examquestions, always think hours:minutes. Thus, on a perfect exam using the times above,you would start each section with the following hours:minutes displayed on-screen:Multiple-choice section: 3 hours 0 minutesEssay section: 1 hour 15 minutes

3. Next, develop shorthand for hours:minutes. Signify 3 hours, 0 minutes as 03:00 and 1 hour,15 minutes as 01:15. Thus, the start times for the two sections will beMultiple-choice section: 03:00Essay section: 01:15

4. Use one page of scratch paper (provided at Prometric) for your Gleim Time ManagementSystem at the exam. As soon as the exam starts, write Multiple-choice section and Essaysection in the left column followed by 03:00 and 01:15 next to the respective sections. Asyou complete the multiple-choice section, note the time, move on to your essay section,and create the Gleim Time Control Sheet for essays (see Study Unit 5, Subunit 3).

5. It is essential to use the Gleim Test Prep Software, Test Prep for Windows Mobile, andGleim Online to practice answering multiple-choice questions under exam conditions. Theexpectation is 1.5 minutes per question and a 15-minute review of unanswered/markedquestions. This requires you to become proficient at your multiple-choice question-answering technique (see Study Unit 4, Subunit 5).

6. You must also practice essays under exam conditions. Use Gleim Online and Essay Wizardto practice allocating the correct amount of time per question in each scenario. GleimOnline provides one essay scenario per study unit, and Essay Wizard provides twoadditional essays to practice on. All essays in the Gleim system are based on topics testedaccording to the ICMA CSOs.



IMA MEMBERSHIP AND EXAMINATION FORMS

You must apply and become an IMA member in order to participate in the IMA Certificationprograms. The cost is $195 per year for Regular or International membership. Young professionalshave discounted fees of $130. Full-time faculty dues (in the U.S., Canada, and Mexico) are $98 anddues for full-time students are $39 per year (must carry at least 6 equivalent hours per semester andreside in the U.S., Canada, or Mexico).

The IMA offers three member interest groups at $75 per year: the Controllers Council, the CostManagement Group, and the Small-Business Council. Everyone except students and youngprofessionals must pay a $15 IMA registration fee.

The following two pages can be photocopied and used to apply for IMA membership, or call theIMA at (800) 638-4427 ext. 510 and ask for a CMA “kit.” You may also email the IMA [email protected] to request an information kit or apply online on the IMA’s website at www.imanet.org.

Completion of the registration form on the two pages following the IMA membership application isrequired in order to take any of the examination parts.

65


EDUCATION HISTORY Name of Institution Degree Major Date Received/Expected

Undergraduate: __________________________________________________________________________________________________________________________________

Graduate: _______________________________________________________________________________________________________________________________________

Professional Designations Earned: ■■ U.S. CPA ■■ CFA ■■ CIA ■■ Other: ________________________________________________________________________________

CHAPTER AFFILIATION See a list of Regular/Student Chapter options by visiting our website www.imanet.org, or call (800) 638-4427.

Chapter Name: ______________________________________ Chapter Number: _____________ ■■ Member-At-Large (Check here if no chapter affiliation is desired)

■■ International Member-At-Large

E-mail Address: ___________________________________________________________________________________ Fax: ___________________________________________

INSTITUTE OF MANAGEMENT ACCOUNTANTS, INC.• 10 Paragon Drive, Suite 1, Montvale, NJ 07645-1760 • (800) 638-4427 or (201) 573-9000 • fax (201) 474-1600 • [email protected] • www.imanet.org •

M E M B E R S H I P A P P L I C A T I O N

PERSONAL INFORMATION (please print)

■■ Mr. ■■ Ms. ■■ Mrs. ■■ Miss ■■ Dr. Last/Family Name/Surname: __________________________________________________________

First/Given Name: _______________________________________________________________________ Middle Initial: ________ Suffix: _______

Date of Birth (month/day/year):_____ / _____ /______PLC USERS ONLY

■■ New Application

■■ Renewal

■■ Certification (IMA membership required)

■■ BUSINESS MAILING ADDRESS:(See reverse side to enter SIC, job title, and responsibility codes)

Title: _________________________________________________________________

Company Name: ________________________________________________________

Street/P.O. Box: _________________________________________________________

______________________________________________________________________

City: __________________________________________________________________

State/Province: _________________________________________________________

Zip Code/Postal Code: ___________________________________________________

Country: ______________________________________________________________

Business Phone: (Include Country/Area/City Codes) ________________________________

■■ HOME MAILING ADDRESS:

Street/P.O. Box: _________________________________________________________

______________________________________________________________________

City: __________________________________________________________________

State/Province: _________________________________________________________

Zip Code/Postal Code: ___________________________________________________

Country: ______________________________________________________________

Phone: (Include Country/Area/City Codes) ______________________________________________

Please indicate your contact preference:

A. MEMBERSHIP INFORMATION (All payments must be in U.S. Dollars)

■■ Regular Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $195.00(You must reside in the U.S., Canada, or Mexico)

■■ Young Professional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $130.00(You must be 32 or under and reside in the U.S., Canada, or Mexico)

Birthdate (Required) ________________

■■ International Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $195.00(Available to professionals residing outside the U.S., Canada, or Mexico)

■■ Student Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39.00(You must be taking 6 or more hours per semester and reside in the U.S., Canada, or Mexico)

Expected Graduation Date (Year) ________________

■■ Academic Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98.00(You must be a full-time faculty member and reside in the U.S., Canada, or Mexico)

B. OPTIONAL SERVICES(IMA membership required. All payments must be in U.S. Dollars)

■■ Member Interest Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75.00 each■■ Controllers Council ■■ Cost Management Group ■■ Small Business Council

■■ CPE Offerings (Prices valid through 12/31/09)

■■ IMA Ethics Series: Success Without Compromise (4 CPE) . . . . . . . . . . . . $ 75.00*■■ IMA Ethics Series: Fraud in Financial Reporting (2 CPE) . . . . . . . . . . . . . . $ 59.00*■■ IMA Ethics Series: Corporate Ethics: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40.00*

From Policy to Practice (2 NASBA CPE)■■ IMA Ethics Series: Embracing Ethics (2 NASBA CPE) . . . . . . . . . . . . . . . . . $ 45.00*■■ IMA IFRS Series: Embracing IFRS: A Background Primer (2 NASBA CPE) $ 50.00*■■ IMA Knowledge Exchange (144 NASBA CPE) . . . . . . . . . . . . . . . . . . . . . . $289.00**■■ IMA Advantage (200+ NASBA CPE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $289.00**■■ IMA Knowledge Exchange/Advantage Combo (300+ NASBA CPE) . . . . $439.00**■■ IMA CPEdge (45+ NASBA CPE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $195.00**

*Valid for 180 days from date of purchase. **Valid for 365 days.

■■ Certification ■■ CMA–CURRENT FORMAT ■■ CMA–2010 FORMAT

■■ Entrance Fee (Except for college students and academics in the . . . . . . . . . $200.00U.S., Canada, and Mexico. Nonrefundable.)

■■ Student/Academic Entrance Fee (U.S., Mexican, and . . . . . . . . . . . . . . . .$ 75.00Canadian college students and academics. Nonrefundable.)

Please Indicate your PLC User ID:

PROMOTIONAL CODE


MEMBER PROFILE

1. Do you have international responsibilities?■■ Yes ■■ No

2. Does your company have international locations?■■ Yes ■■ No

3. Who will pay your IMA dues?

■■ Me ■■ My Company

4. Is your organization:■■ Public sector ■■ Nonprofit

■■ Private sector ■■ Government

5. What are you looking for most from your IMAMembership?

■■ Certification ■■ Professional networking

■■ Education

■■ Other (please specify) _____________________________

6. Are you a member of any other association?■■ AAA ■■ AFP ■■ AICPA ■■ ASWA

■■ CFA Institute (AIMR) ■■ FEI ■■ IIA

■■ Other (please specify) _____________________________

7. What role do you play in these associations?■■ Chapter assistance ■■ National executive volunteer

■■ Member ■■ Ongoing speaker/educator

■■ Regional executive volunteer

8. How did you learn about IMA?

■■ Chapter meeting ■■ Marketing piece

■■ IMA educational program ■■ Company recommended

■■ IMA website ■■ Industry associate

■■ Industry publication ■■ Professor

■■ Other _________________________________________

■■ Other website ___________________________________

9. How many employees are in your company or organization?■■ Under 50 ■■ 51-100 ■■ 101-200 ■■ 201-500

■■ 501-1,000 ■■ 1,001-10,000 ■■ Over 10,000

10. What is your company’s current annual revenue?■■ Under $1 million ■■ $500 million - $1 billion

■■ $1 - $10 million ■■ $1 billion - $5 billion

■■ $10 - $100 million ■■ $5 billion - $10 billion

■■ $100 - $500 million ■■ Over $10 billion

SIC CODE – STANDARD INDUSTRYCLASSIFICATIONS(Please Circle One)

01 Education02 Healthcare03 Media and Entertainment16 Construction, Mining, Agriculture21 Manufacturing41 Transportation, Communication,

Utilities51 Wholesale/Retail Trades61 Finance63 Insurance81 Business Services82 Real Estate86 High Tech90 Nonprofit93 Government96 Pharmaceuticals & Biotechnology99 Other ____________________

JOB TITLE CODE(Please Circle One)

05 Executive Officer11 Corporate Officer15 Vice President31 Controller33 Chief Financial Officer35 Director/Manager41 Supervisor47 Accountant51 Analyst55 Programmer57 Administrative59 Consultant65 Academic99 Other ____________________

RESPONSIBILITY CODE(Please Circle One)

01 General Management05 Corporate Management10 Public Accounting15 General Accounting20 Personnel Accounting25 Cost Accounting30 Government Accounting33 Environmental Accounting35 Finance40 Risk Management45 Budget and Planning50 Taxation55 Internal Auditing60 Education65 Information Systems70 Student75 Retired80 Other ____________________

CMA CERTIFICATION PROGRAMIMA membership required. If you are applying to the certificationprogram for the first time, please check the appropriate box andenclose the Certification Entrance Fee ($200.00) required of newcertification applicants only. ($75.00 for students and academicsin the U.S. , Canada, and Mexico.)

■■ Applying as a Student (U.S., Canada, and Mexico only) — Upon graduation, arrange for an official c opy of y our transcript tobe sent.

■■ Applying as A cademic ( U.S., Canada, and Me xico onl y) — Please provide a letter on school stationery affirming full-timeteaching status.

Please complete the Additional Educational Information below:

ADDITIONAL EDUCATIONAL INFORMATION Check the appropriate box and make arrangements for supportingdocuments to be forwarded to the IMA certification department.Only one form of credentials is required.

■■ Later — B y selec ting this option, many applic ants cho ose to pr ovide their educ ational cr edentials af ter c ompleting the exams.

If you would like to have your credentials reviewed prior to tak-ing the e xams to ensure that they are acceptable, please selectone of the options b elow. Please not e tha t the educ ationalrequirement must be fulfilled prior to certification.

■■ College Graduate — Submit official transcript (translated intoEnglish) showing university degree conferred and official uni-versity seal, or arrange to have proof of degr ee sent directlyfrom university.

Strategic Finance Magazine

Subscription rates per year:Members: . . . . . . . . . . . . . $ 48 (Included in dues, nondeductible)

Student Members: . . . . $ 25 (Included in dues, nondeductible)

Management Accounting QuarterlySubscription rates per year:Members: . . . . . . . . . . . . . $ 10 (Included in dues, nondeductible)

C. REGISTRATION FEES

■■ Membership Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15.00(All new members except Students and Young Professionals)

■■ Reinstatement Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$15.00(If your membership has lapsed for 90 days, a $15.00 reinstatement fee applies)

TOTAL DUE (add sections A, B, and C) . . . . . . . . . . . . . . . . . . . . . . .$ _________

APPLICANT STATEMENTFelony Conviction Information: If you have been convicted of a felony visit

www.imanet.org/explanation.

I affirm that the statements on this application are correct, and I agree to abide by the Statement of Ethical Professional Practice.

Signature: _______________________________________________ Date: ____________

PREFERRED METHOD OF PAYMENT(All payments must be in U.S. Dollars)

■■ Wire Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .All wire transfers must be made with bank fees prepaid.Please notify IMA by e-mail ([email protected])

that you are paying by wire transfer.Include your name,amount sent,and wire transfer receipt number.

■■ Check PaymentsMy check for $ _________________ , payable to IMA, is enclosed.

No checks drawn on foreign banks will be accepted unless they are payable through

U.S. correspondent banks and in U.S. dollars.

■■ Credit Card Payments

Charge my credit card: ■■ AMEX ■■ Discover ■■ MasterCard ■■ VISA

Card Number: ___________________________________________ Exp.: ____________

Cardholder Name: ________________________________________________________

Signature: _______________________________________________________________

Promotional code (if applicable) _____________________________________________

INSTITUTE OF MANAGEMENT ACCOUNTANTS, INC.• 10 Paragon Drive, Suite 1, Montvale, NJ 07645-1760 • (800) 638-4427 or (201) 573-9000 • fax (201) 474-1600 • [email protected] • www.imanet.org •

Please send your completed application and payment (made out to IMA) to:Rev. 1209

IMA occasionally makes available its members’ addresses (excluding telephone and e-mail) to vendors who provide products and services to the management accounting and finance community.If you prefer not to be included in these lists, please check this box. ■■


$200 Regular Member Entrance Fee if applicable (MUST BE PAID PRIOR TO TAKING FIRST EXAM)

$ 75 Student/Academic Member Entrance Fee if applicable (U.S., Mexico and Canada) (MUST BE PAID PRIOR TO TAKING

$350 Examination Registration Fee worldwide per part .............................................................................................................................................. $

$225 Transition Exam Fee ................................................................................................................................................................................................... $

Less: Student/Academic Discount (50% students, 50% faculty) (U.S., Mexico and Canada only) Up to two discounted exam parts to beused within 12 months of entering the program. .................................................................................................................................................................. $

Parts 1 and 2 Register for both parts at the same time, in the same testing window, and receive a $100 discount ($300 per part forregular members, $125 per part for Students/Academics in the US, Canada, or Mexico). ............................................................................ $

AMOUNT DUE ................................................................................................................................................................................................................ $

E-mail Fax Number: (Include Area/Country/City Codes)

Institute of Certified Management Accountants10 Paragon Drive • Montvale, New Jersey 07645-1759(201) 573-9000 • (800) 638-4427 • FAX: (201) 474-1600

CMA EXAMINATIONREGISTRATION FORM

PERSONAL INFORMATION TYPE OR PRINT CLEARLY

City State/Province/Country Zip Code/Postal Code

IMA Member #Mr. Ms. Miss Mrs. Dr.

Last Name/Family Name First Name/Surname Middle Initial Suffix

Mailing Address/Street/P.O. Box

Daytime Telephone (include area code or country/city code)

PLEASE COMPLETE BOTH SIDES NOTE: PAYMENT IN FULL MUST ACCOMPANY REGISTRATION FORM - FEES SUBJECT TO CHANGE

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CMA Two Part Program (Including Transition Exam)

TOTALPARTS

Please check box if this is a new address. Please Specify Home Business

NOTES:

1. Certification entrance fees are NOT REFUNDABLE.

2. After 30 days from the date of registration, examination fees are NOT REFUNDABLE. Within 30 days of the registration date an examination feemay be refunded IF NO TEST APPOINTMENT HAS BEEN SET. A $25 processing fee will be subtracted from the refund.

3. There are no extensions available for exam registrations.

PART 1Financial Planning, Performance & Control

May/June

Sept/Oct

PART 2Financial Decision Making

May/June

Sept/Oct

PART TTransition Exam

May/June

Sept/Oct

Please select the part(s) and testing window(s) you would like to register for. (You must schedule your examination appointment at least three daysin advance of the test date.)

** Please note: any registrations for parts 1, 2, or transition exam received after June 15th or October 15th will be registered for the followingtesting window.

You must take the exam during the window you have registered for. Once you select a testing window you will not be able to change that testingwindow.

CMA Program$200 Entrance Fee ($75 for Student and Academic Members in the US, Canada, or Mexico new certification applicants only) The entrance fee forthe certification program must be paid before taking the examinations. Candidates must complete the CMA program within three years from entryinto the program. Candidates also must register for an exam part within the first 12 months of entering the program. If a candidate does not registerfor an exam part within the first 12 months of entering the program, they will have to REPAY the entrance fee. If both exam parts are not success-fully completed within three years of entering the certification program, the passed part will expire and the entrance fee will have to be repaid.


PREFERRED METHOD OF PAYMENT (All payments must be in U.S. Dollars)

Wire Payments

All wire transfers must be made with banks fees prepaid. Please notify IMA by e-mail ([email protected]) that you are paying by wire transfer.

Include your name, member ID number if applicable, amount sent, and wire transfer receipt number.

Check Payments

My check for $ , payable to ICMA, is enclosed. No checks drawn from foreign banks will be accepted unless they are payable

through U.S. correspondent banks and in U.S. dollars.

Credit Card PaymentsCharge my credit card: VISA MasterCard American Express Discover

Credit Card Number: — — — Expiration Date:

Promotional Code (if applicable):

Card Holder Name:

Signature of Card Holder:

If you are applying for admission to the certification program, please complete the following.

ADDITIONAL EDUCATIONAL INFORMATION

Check one of the following and make arrangements for supporting documents to be forwarded to the IMA certification department.

Later - By selecting this option, applicants choose to provide their educational credentials after completing the exams. If you would like to have yourcredentials reviewed prior to taking the exams to ensure that they are acceptable, please select one of the options below. Please note that the educa-tional requirement must be fulfilled prior to certification.

College Graduate - Submit official transcript showing university degree conferred and official university seal or arrange to have proof of degree sentdirectly from university.

CERTIFICATION PROGRAM APPLICATION

CONFIDENTIALITY STATEMENT & PAYMENT INFORMATION

I affirm that the statements on this registration are correct and agree to abide by IMA’s Statement of Ethical Professional Practice.

I hereby attest that I will not divulge the content of this examination, nor will I remove any examination materials, notes, or other unauthorizedmaterials from the examination room. I understand that failure to comply with this attestation may result in invalidation of my grades and disqualifica-tion from future examinations. For those already certified by the Institute of Certified Management Accountants, failure to comply with the statementwill be considered a violation of IMA’s Statement of Ethical Professional Practice and could result in revocation of the certification.

PLEASE COMPLETE BOTH SIDES NOTE: PAYMENT IN FULL MUST ACCOMPANY REGISTRATION FORM - FEES SUBJECT TO CHANGE

10 Paragon Drive • Montvale, New Jersey 07645-1760 • www.imanet.org(201) 573-9000 • (800) 638-4427 • Fax (201) 474-1600

Applying as a Student (U.S., Mexico and Canada) – Upon graduation, arrange for an official copy of your transcript to be sent.

Applying as Faculty (U.S., Mexico and Canada) – Please provide a letter on school stationery affirming full-time teaching status.

NOTE: Please pay the entrance fee before submitting your educational credentials.

Signature of Applicant: Date:

IMA occasionally makes available its members’ addresses (excluding telephone and e-mail) to vendors who provide products and services to themanagement accounting and finance community. If you prefer not to be included in these lists, please check this box.

MM/YY

RETAKE POLICY

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An exam part may be taken only ONE time in a testing window and no more than three times in a twelve month period.


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