CMA Gliem Success

i

CMA REVIEW A SYSTEM FOR SUCCESS Fifteenth Edition TABLE OF CONTENTS Study Unit 1. The CMA Examination: An Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 1

Study Unit 2. ICMA Content Specification Outline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Study Unit 3. Exam Preparation, Administration, and Grading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Study Unit 4. Multiple-Choice Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Study Unit 5. Essay Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Study Unit 6. Preparing to Pass the CMA Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Study Unit 7. How to Take the CMA Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Order Order Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

This booklet’s purpose is to help you develop and implement a SYSTEM FOR SUCCESS for passing the CMA exam, which includes 1.

Understanding the CMA exam process, including the purpose of the exam, subject matter coverage, preparation, format, administration, grading, and pass rates

2.

Learning and understanding the subject matter tested

3.

Perfecting your question-answering techniques by answering questions under exam conditions

4.

Planning and practicing exam execution

5.

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 the confidence necessary to PASS. “EXAM SUCCESS GUARANTEED!”  GUARANTEED!”  The Gleim CMA Review System  GUARANTEES that you will pass each part on the first try. The system combines our books, books, Test Prep Software, Test Prep for Windows Mobile, Audio CDs, Gleim Online, Essay Wizard, and a Personal Counselor to maximize your available study study time. Because we identify identify and focus on your weak areas, you will not spend any more time preparing than is necessary to guarantee success.

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

13 23 27 35 49 57 75

ii Gleim Publications, Inc.

This is the second printing of the fifteenth Review: A System System for  edition of CMA Review: Success . Please email [email protected] with CMA SFS 15-2 included in the subject or text. You will receive receive our current update as a reply. reply. Updates are available until the the next edition is published.

P.O. Box 12848 University Station Gainesville, Florida 32604 (800) 87-GLEIM or (800) 874-5346 (352) 375-0772 FAX: (352) 375-6940 375-6940 Internet: www.gleim.com Email: [email protected]

EXAMPLE:

ISBN: 978-1-58194-8 978-1-58194-817-2 17-2 CMA Revie Review: w: Part 1 ISBN: 978-1-58194-8 978-1-58194-818-9 18-9 CMA Revie Review: w: Part 2  ISBN: 978-1-58194-8 978-1-58194-823-3 23-3 CMA System for Success 

To: From: Subject:

[email protected] your email address  CMA SFS 15-2

Copyright © 2011 by Gleim Publications, Inc. First Printing: January 2010 Second Printing: March 2011  ALL RIGHTS RESERVED. No part of this material may be reproduced in any form whatsoever whatsoever without express written permission from Gleim Publications, Inc. ACKNOWLEDGMENTS

The authors are indebted to the Institute of Certified Management Accountants (ICMA) for  permission to use problem materials from from past CMA examinations. Questions and unofficial answers from the Certified Management Accountant Examinations, copyright © 1982 through 2005 by the Institute 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 vice presidents. Mr. Gleim coordinated the production staff, staff, reviewed the manuscript, manuscript, and provided production 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 the University of Florida College of Business. Mr. Irwin provided substantial editorial assistance throughout 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 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, financial audit, IT audit, COBOL programming, and data warehouse management. He extensively revised portions of this manuscript. A PERSONAL THANKS

This manual would not have been possible without the extraordinary effort and dedication of Jacob Brunny, Julie Cutlip, Eileen Nickl, Teresa Soard, Joanne Strong, and Candace Van Doren, who typed the entire manuscript and all revisions and laid out the diagrams and illustrations in this booklet. We also 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 this project. This publication publication is designed to provide accurate and authoritative authoritative information information with regard to the subject subject matter covered. It is  sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance assistance is required, required, the services services of a competent competent professional professional person should be sought. sought. (From a declaration of principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.)

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

iii

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 soon as you have received your grades. The CMA exam is NONDISCLOSED, NONDISCLOSED, and you will sign an attestation including, “I hereby attest attest that I will not divulge the the content of this examination...” examination...” We ask only for information about our materials, i.e., the topics that need to be added, expanded, etc. Our  approach has ICMA approval. Please help us by completing and sending us the form at the back of each Gleim book immediately after you take the CMA exam. exam. DO NOT discuss individual CMA CMA questions with us or anyone else, else, even other CMA candidates. Thank you for maintaining the integrity of the nondisclosed CMA exam and contributing 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 candidates have access to email or the Internet. Internet. Accordingly, we provide an automatic update service that you can access 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 the first printing of the 15th edition, type the following in the subject line: Financ Financial ial Planni Planning, ng, Perfor Performan mance, ce, and Contro Controll Financial Decision Making

Book CMA 1 15-1 15-1 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 include revisions to exam policies and procedures by the ICMA, new pronouncements that are testable on the upcoming exams, and other valuable information. information. Updates are available until the next edition edition is published. THE OTHER GLEIM CMA MATERIALS

To pass the CMA exam, you should carefully read Study Units Units 1 through 7 in this booklet. Then complete each study unit consecutively by using the combination of our books, Test Prep Software, Test Prep for Windows Mobile, Mobile, Audio CDs, Gleim Online, and Essay Essay Wizard. This system allows busy CMA 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 ide ntify candidates’ weaker areas. A Personal Counselor is also provided to to ensure each candidate has the competitive edge. The Essay Wizard provides additional online essay questions for extra practice. practice. The CMA Test Prep  Software and Test Prep for Windows Mobile contain thousands of multiplechoice 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. time. Each book corresponds to the other review materials and contains Knowledge Transfer Outlines, multiple-choice questions and explanations, and essay questions and explanations. The CMA Review  Audio CDs will assist candidates in turning non-traditional study time into valuable review. The audios are ideal while commuting, exercising, etc.

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

iv

USER INQUIRIES (TECHNICAL ASSISTANCE) AND CUSTOMER SERVICE PROCEDURES

Technical questions about our materials should be sent to us via email, fax, or mail. The appropriate author, consultant, or staff member will give it thorough consideration and a prompt response. 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 at www.gleim.com/support/, email us at [email protected], or call us at (800) 874-5346. LISTING OF GLEIM STUDY UNITS Part 1: Financial Financial Planning, Performance, Performance, and Control

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Budgeting Concepts and Forecasting Techniques Budget Methodologies and Budget Preparation Cost Management Terminology and Concepts Cost Accumulation Systems Cost Allocation Techniques Operational Efficiency and Business Process Performance Cost and Variance Measures Responsibility Accounting Accounting and Performance Performance Measures Internal Controls I Internal Controls IIII and Ethics for Management Accountants

Part 2: Financial Financial Decision Making

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Basic Financial Statement Analysis Financial Performance Metrics – Financial Ratios Profitability Analysis Analysis and Analytical Analytical Issues Investment Risk Risk and Portfolio Portfolio Management Financial Instruments and Cost of Capital Managing Current Assets Raising Capital, Corporate Corporate Restructuring, and International Finance Decision Analysis and Risk Management Investment Decisions I Investment Decisions IIII 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 Florida and is a member of the American Accounting Association, Academy of Legal Studies in Business,  American Institute of Certified Public Accountants, Association of Government Accountants, Florida Institute of Certified Public Accountants, The Institute of Internal Auditors, and the Institute of  Management Accountants. He has had articles articles published in the Journal of Accountancy , The  Accounting Accounting Review , and The American Business Law Journal  and is author/coauthor of numerous accounting and aviation books and CPE courses. Dale L. Flesher is the Arthur Andersen Alumni Professor in the School of Accountancy at the University of Mississippi and has written over 300 a rticles for business and professional journals, including Management Accounting , Journal of Accountancy , and The Accounting Review , as well as numerous books. He is a member of the Institute Institute of Management Accountants, American Institute of  Certified Public Accountants, The Institute of Internal Auditors, American Accounting Association, and  American Taxation Association. Association. He is a past past editor of The Accounting Historians’ Journal  and is a trustee and past president of the Academy of Accounting Historians. Copyright © 2011 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. reserved. Duplication prohibited. www.gleim.com

1

STUDY UNIT ONE THE CMA CMA EXAMINAT EXAMINATION: ION: AN OVERVIEW OVERVIEW (12 pages of outline)

1.1 1.2 1.2 1.3 1.3 1.4 1.5 1.5 1.6 1.6 1.7 1.8 1.9 1.10 1.1 0 1.11 1.1 1 1.12 1.13 1.14 1.1 4 1.15 1.1 5 1.16 1.17 1.1 7

Corpor Corporate ate Manage Managemen mentt Accoun Accountin ting  g  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purp Purpos ose e of the the Exam Examin inat atio ion  n  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subj Subjec ectt Ma Matt tter er Test Tested  ed  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Level Level of Perfor Performan mance ce Req Requir uired  ed  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Glei Gleim m Stud Study y Un Unit its  s  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Who Who Shou Should ld Take Take the the CM CMA A Exam  Exam  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Instit Institute ute of Manage Managemen mentt Accoun Accountan tants ts (IMA) (IMA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Institute Institute of Certifie Certified d Management Management Accountant Accountants s (ICMA) (ICMA) . . . . . . . . . . . . . . . . . . . . . . . . Requir Req uireme ements nts to Attai Attain n the CM CMA A Design Designati ation  on  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Educat Education ion Req Requir uireme ement  nt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Experi Experienc ence e Req Requir uireme ement  nt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How to to (1) Apply Apply for, for, (2) (2) Register Register for, for, and and (3) Schedul Schedule e Your CMA CMA Exam  Exam  . . . . . . . . . . . . . . Maintaini Maintaining ng Your CMA Designati Designation  on  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Steps Steps to Become Become a CM CMA A ................................................... Prepa Preparin ring g for for CMA Exam Exam Succ Success  ess  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Other CMA CMA Review Review Materials, Materials, Systems, Systems, and Courses  Courses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How Much Much Mone Money y Shou Should ld You Spend?  Spend?  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 2  3  4  4  5  5  6  6  6  7  8  9  10  10  11 12 

TRANSITION TO TWO-PART EXAM

The ICMA has changed the CMA CMA program from a four-part to a two-part two-part exam. The new two-part exam became available May 1, 2010. Candidates are now able to enter only into into the new two-part program. Candidates for the four-part exam can transition to the new exam. exam. If they passed old Part 2, they only have to pass new Part 2 to complete the CMA. If they passed old Part 3, they only have to pass new Part 1 to complete the the CMA. If both old Parts 2 and 3 were passed, a 2-hour transition exam must be taken to complete the CMA. Old exam Parts 1, 2, 3, and 4 are no longer available to complete. 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 background information about the IMA and the ICMA. ICMA. Much of this study unit is taken from the CMA Handbook  Handbook , published by the ICMA and available at www.imanet.org/cma_certification/study_resources.aspx. 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: Objective: Maximize Maximize the value of the firm by optimizing optimizing a. b. c.

2.

Corporate Corporate financi financial al management management involves involves a financi financial al manager, manager, usually usually a vice-pre vice-president sident or  chief financial officer, who is assisted by the a. b.

3.

Long-term Long-term investment investment strategies strategies The capital structure, i.e., how these long-term investments are funded Short-term Short-term cash flow management management

Treasurer Treasurer -- cash, cash, credit, credit, capita capitall outlay outlay management management Controller Controller -- financial, financial, cost, tax accounting accounting

All accounti accounting ng and and finance finance personn personnel el are beneficiarie beneficiaries s of CMA participati participation. on.

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

2

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

4.

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

5.

The diagram diagram below below illust illustrates rates an economic economic entity entity combining combining the factors factors of productio production n into finished goods or services (arrows to the right) with money flowing to the left.

6.

Put CMA CMA in perspe perspective ctive when conside considering ring the the production production of goods goods or servic services es in our  our  capitalistic society. An entity combines the factors factors of production into finished goods. a.

Note that 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 executive officer) has overall responsibility for the entity’s operations.

1.2 PURPOSE PURPOSE OF THE THE EXAMIN EXAMINATIO ATION N

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, and  a 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 encourage continued continued professional professional development development by management management accountants. accountants.

The exam tests the candidates’ knowledge and ability with respect to the current state of the field of management accounting. We have arranged the subject matter tested on the CMA examination into 10 study units for each part. Each part is presented in a separate book. Both of these books contain review outlines; prior  CMA exam questions, answers, and answer explanations; and essay questions. CMA Exam

Part Formal Title Exam Length

1

2

Financial Planning, Performance, and Control

Financial Decision Making

4 hours

4 hours

100

100

2

2

No. of Questions Multiple-Choice Essay

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

3

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

1.3 SUBJECT SUBJECT MATTER MATTER TESTED TESTED

The ICMA has developed Content Specification Outlines (CSOs) and has committed to follow them on each examination. examination. In addition to the CSOs, the ICMA has published Learning Outcome Statements (LOSs) that specify what you should be able to do. Candidates for the CMA designation are expected to have a minimum level of business knowledge that transcends all examination parts. This minimum level includes knowledge of basic financial statements, time value of  money concepts, and elementary statistics. Specific discussion of the ICMA’s Levels of  Performance (A, B, and C) is provided on the next page. Each Gleim CMA Review  study unit begins with the LOSs from the ICMA, followed by our Knowledge Transfer Outline, Core Concepts, multiple-choice practice questions and explanations, and finally essay questions. The CMA Review  study unit titles and organization differ somewhat from the subtopic titles used by the ICMA in its CSOs (see the tables displayed in Study Unit 2 on pages 15-21). The selection of study units in CMA Review  are based on the expected future exam coverage as defined in both the CSOs and LOSs. Before you study our Knowledge Transfer Outlines, read the LOSs at the beginning of each study unit, which will alert you to what is expected and required of you.

ICMA CSO Excerpt Example: Area A from Financial Planning, Performance, and Control  A. Planning, Budgeting and Forecasting (30% - Levels A, B, and C) 1.

Budgeting concepts 

a. b. c. d. 2.

Forecasting techniques 

a. b. c. d. e. 3.

b. c. d. e. f.

Annual Annual busine business ss plans plans (maste (master  r  budgets) Proje Project ct budge budgeti ting ng Activi Activityty-bas based ed budget budgeting ing Zero-b Zero-base ased d budgeti budgeting ng Contin Continuou uous s (rolli (rolling) ng) budget budgets s Flex Flexib ible le budge budgeti ting ng

Annual profit plan and supporting  schedules 

a. b. c. 5.

Regres Regressio sion n analys analysis is Learnin Learning g curve curve analys analysis is Expone Exponenti ntial al smooth smoothing ing Time Time series series analys analysis is Expe Expect cted ed valu value e

Budgeting methodologies 

a.

4.

Operati Operations ons and perfor performan mance ce goals goals Characteris Characteristics tics of a successfu successfull budget process Resour Resource ce alloca allocatio tion n Other Other budget budgeting ing concep concepts ts

Operati Operationa onall budget budgets s Fina Financ ncia iall budge budgets ts Capi Capita tall budge budgets ts

Top-level planning and analysis 

a. b. c.

Pro Pro form forma a inco income me Financial Financial statement statement projections projections Cash Cash flow flow projec projectio tions ns

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

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

4

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

ICMA’S CMA CONTENT SPECIFICATION OUTLINE OVERVIEW Part 1: Financial Financial Planning, Planning, Performance, Performance, and Control Control

Planni Planning, ng, Budget Budgeting ing,, and Foreca Forecasti sting ng Performance Management Cost Management Internal Controls Professional Ethics

30% 25% 25% 15% 5%

Part 2: Financial Financial Decision Decision Making Making

Financial Statement Analysis Corporate Finance Decision Decision Analysis Analysis and Risk Management Management Investment Decisions Professional Ethics

25% 25% 25% 20% 5%

Each CMA exam part will cover the topics above. For example, Performance Management will constitute 25% of each Part 1 exam. 1.4 LEVEL LEVEL OF PERFO PERFORMAN RMANCE CE REQUIR REQUIRED ED

The ICMA has specified three levels of coverage as reproduced below and indicated in its content specification outlines. All topics on the CMA exam are tested up to to Skill Level C. The relative proportions of multiple-choice questions are: Skill Level A - 25%, Skill Level Level B - 50%, and Skill Level C - 25%. Authors’ note: Rely on the questions at the end of each study unit in each CMA Review  book and 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 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 questions will be calculations, in contrast contrast to conceptual questions. The ICMA 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 GLEIM STUDY STUDY UNITS UNITS

We have divided the overall task of preparing for the CMA exam into 10 study units for each part of the exam. These study units conform to (or parallel) the ICMA CSOs. CSOs. The average study unit in CMA Review  is 50 pages (including CMA questions and Gleim answer explanations and an essay question) 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 the corresponding Gleim study units on the right. right. Most IMA areas are broken down into more than one Gleim study unit. Each of the Gleim CMA Review  books has an ICMA CSO with a corresponding Gleim study unit listing for that exam part.

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

5

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

1.6 WHO SHOULD SHOULD TAKE TAKE THE THE CMA EXAM

All persons who wish to present themselves as management finance and management accounting professiona professionals ls should pursue the CMA certification. certification. People People who say they are in the field of management management accounting accounting are often asked, “Are “Are you a CMA?” CMA?” The IMA gives the following following reasons to become a CMA: Because no other accounting or finance credential lends itself more directly to today’s complex  and changing business environment. Because you will confirm substantial knowledge of accounting, finance, and important related  fields 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 strict  code of ethics. Because you will demonstrate your commitment to personal professional development and  lifelong learning.

The CMA designation designation is prestigious, prestigious, and it is a source source of pride to those who have achieved it. Do not delay in taking the CMA exam. You will likely regret regret throughout throughout your professional professional career a decision not to obtain the CMA designation, designation, even if you are not working working in management management finance or accounting. accounting. 1.7 THE INSTITUT INSTITUTE E OF MANAGEMENT MANAGEMENT ACCOUN ACCOUNTANT TANTS S (IMA)

Conceived as an educational organization to develop the individual management accountant professionally and to provide business management with the most advanced techniques and procedures, the IMA was founded as the National Association of Cost Accountants in 1919 with 37 charter members. members. It grew rapidly, with 2,000 applications applications for membership membership in the first year, and today it is the largest management accounting association in the world, with approximately 60,000 members and more than 205 chapters in the U.S. and 10 abroad. The IMA has made major contributions to business management through its continuing education program, with courses and seminars conducted in numerous locations across the country; its two Management Accounting Accounting Quarterly , magazines, Strategic Finance , which is a monthly publication, and Management which is an online journal; other literature, including research reports, monographs, and books; a technical inquiry service; a library; the annual international conference; frequent meetings at chapter levels; and frequent communication through online member interest groups and email exchanges. Membership Membership in the IMA is open to all persons interested interested in advancing advancing their knowledge of accounting accounting or financial financial management. management. It is required for CMA candidat candidates es and CMAs. CMAs are also also required to pay a $30 CMA maintenance fee each year when they renew their IMA membership. IMA Membership Fees*

Regular Student Young Professional Academic

Through August 31, 2011 $195 $ 39 $130 $ 98

Beginning September 1, 2011 $210 $ 39 $140 $105

CMA Annual Fees

$225 $ 69 $160 $128

* All new members (except Students and Young Professionals) also pay a one-time registration fee of $15. Apply for IMA membership membership online at www.imanet.org/ima_membership.aspx. www.imanet.org/ima_membership.aspx. Membership application 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.

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

6

SU 1: The CMA CMA Examinat Examination: ion: An Overvie Overview  w 

1.8 THE INSTITUTE INSTITUTE OF CERTIFIED CERTIFIED MANAGEMEN MANAGEMENT T ACCOUNTANTS ACCOUNTANTS (ICMA) (ICMA)

The ICMA is located located at the IMA headquarters headquarters in Montvale, Montvale, New Jersey. The only function function of the ICMA is to offer and administer administer the CMA designation. designation. The staff consists consists of the managing director, director, the director director of examination examinations, s, and support support staff. The ICMA occupies occupies about 2,000 square feet of office office space in the IMA headquarters. headquarters. This office office is where new examination examination questions questions are prepared and where all records are kept. ICMA Board of Regents Staff

The 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 as chair by the president of the IMA. The regents are appointed appointed by the president of the IMA to serve 3-year terms. terms. Membership Membership on the Board of Regents rotates, rotates, with one-third of the regents being appointed appointed each year. The regents regents usually meet 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 at the ICMA office office in Montvale, Montvale, NJ. They undertake undertake all of the day-to-day day-to-day work with respect respect to the CMA program. 1.9 REQUIREME REQUIREMENTS NTS TO ATTAI ATTAIN N THE CMA DESIGN DESIGNATIO ATION N

The CMA designation designation is granted granted only by the ICMA. Candidates Candidates must complete complete the following steps to become a CMA: 1.

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

2.

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

3.

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

4.

Satisf Satisfy y the educat education ion requir requireme ement nt (bachelor’s degree in any area from an accredited institution).

5.

Satisf Satisfy y the experi experienc ence e requir requireme ement nt [2 years (continuous) of professional experience].

6.

Comply with the IMA Statement of Ethical Professional Practice .

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

1.10 EDUCATIO EDUCATION N REQUIREME REQUIREMENT NT

Candidates 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 by an independent agency listed at www.aice-eval.org or www.naces.org. NOTE: NOTE: Educational Educational credentials credentials must be submitted submitted when applying or within within 7 years of passing the examination examination.. The educational educational credentials credentials must qualify in order to be certified. certified.

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

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

7

1.11 EXPERIE EXPERIENCE NCE REQUIREM REQUIREMENT ENT

Two continuous years of professional professional experience experience in financial management and/or management accounting are required any time prior to or within 7 years of passing the examination. 1.

Qualifying Qualifying experience experience consis consists ts of employment employment in positions positions that require regularly regularly making making  judgments involving the principles of management accounting and financial management, e.g., a. b. c. d. e. f. g. h. i.

2.

Employment in functions that require the occasional application of management accounting principles, but are not essentially management-accounting oriented, will not satisfy the requirement, e.g., a. b. c. d. e. f.

3.

Financ Financial ial analys analysis is Budget Budget prepar preparati ation on Management Management information information systems systems analysis analysis Financ Financial ial manage managemen mentt Manage Managemen mentt accoun accountin ting g Auditing Auditing in government, government, finance, finance, or industry industry Manage Managemen mentt consul consultin ting g Auditing Auditing in public accounting accounting Research, Research, teaching, teaching, or or consulti consulting ng related related to manageme management nt accounti accounting ng (for (for teaching teaching,, a significant portion required to be above the principles level)

Comput Computer er operat operation ions s Sales Sales and market marketing ing Manu Manufa fact ctur urin ing g Engin Enginee eeri ring ng Huma Human n reso resour urce ces s Employment Employment in interns internships, hips, trainee, trainee, clerical, clerical, or nontec nontechnical hnical positions positions

Continuous Continuous part-t part-time ime positio positions ns of 20 20 hours per week week meeting meeting the the definitio definition n of qualifie qualified d experience will count toward the experience requirement at a rate of 1 year of experience for every 2 years of part-time pa rt-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 a response from the ICMA as soon as your request is evaluated. Institute of Certified Management Accountants 10 Paragon Drive, Suite 1 Montvale, Montvale, NJ NJ 07645-1760 07645-1760 (201) 573-9000 (800) 638-4427 [email protected]

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

8

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

1.12 HOW TO (1) APPLY APPLY FOR, FOR, (2) REGISTER REGISTER FOR, FOR, AND (3) SCHEDULE SCHEDULE YOUR YOUR CMA EXAM EXAM

First, 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 and experience requirements are discussed beginning on page 6. You must provide two references if  requested: one from your employer and the second second from someone other than a family member or  fellow employee. An official transcript providing proof of graduation is also required after you have completed the exams. There is a $2 25 Certification Entrance Fee ($75 for students and academics), and everyone who enters the certification program receives 6 months’ access to sample questions and answers and the CMA Assessment Assessment Tool. Once a person has become a candidate, (s)he must register  for an exam part within the first first 12 months or repay the entrance fee. Also, there is no participant’s fee other than IMA membership dues unless a candidate does not register for a part within 12 months or  complete 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 sit for the exams. The exam registration form is very simple and takes takes about 2 minutes to complete. The registration fee for each part of the exam is $350. North American student and academic members, as well as any candidate candidate taking two parts in one testing testing window, have a discount price. See the table below for a concise listing of fees. If  you register for a specific testing window and fail to take the exam, you must register again and repay the full registration fee. Entrance Fee

Exam Fee One Part/Window

Exam Fee Both Parts/Window

$225 $75

$350 $350 $175

$300 $125

Regular Student Academic

$75

$175

$125

The IMA encourages candidates to view information and complete membership application and exam registration online at www.imanet.org/cma_certification/exam_procedures_and_registration.aspx. www.imanet.org/cma_certific ation/exam_procedures_and_registration.aspx. You can also call to order  a registration booklet and IMA application form from the ICMA at (800) 638-4427. Both Parts 1 and 2 are offered in three three testing windows: January/February, May/June, and September/October. Register about 6 weeks weeks before the time time you wish to take the exam. Registration for Parts 1 and 2 received on or after February 16, June 16, or October 16 will be authorized for any future testing window (i.e., not the current window, but the next next window or later). For example, if you register 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 your exam is

October October 16-February 16-February 15 January/Fe January/February bruary Febr Februar uary y 16-J 16-Jun une e 15 May/ May/Ju June ne June June 16-O 16-Oct ctob ober er 15 Sept Septem embe ber/ r/Oc Octo tobe ber  r  Finally, once you have received your authorization letter from the ICMA, you will need to schedule an appointment to take the exam with with Prometric. The easiest method to schedule schedule your appointment is online at www.prometric.com/ICMA. www.prometric.com/ICMA. This website also provides phone numbers numbers should you wish to call the appropriate 800 number for your country or local Prometric testing center.

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

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

9

ICMA Refund Policy

If you have not set an appointment with Prometric, the Exam Fee may be refunded at your request within 30 days of registratio registration. n. A $25 processing processing fee will be subtracted subtracted from the refund. refund. The Certification Entrance Fee is not refundable. Pass/Fail and Grade Reports

The essay questions are graded at a later time, so you will not receive immediate pass/fail results. The scores for the multiple-choic multiple-choice e and essay sections sections are added together together for each part for a total weighted weighted score of pass/fail pass/fail reflected reflected in a scaled score. The total score determines determines pass/fail pass/fail status, so candidates candidates are not required to receive passing passing scores on both sections. sections. The scores will be mailed approximate approximately ly 6 weeks from the end of the month in which you sat for your exam. A performance performance report will be provided provided for the multiple-ch multiple-choice oice section section for those who did not pass the exam. See Study Unit 3, Subunit 6, for more details on the CMA exam grading process. If you fail the exam, you may register register to take it again as soon as you like. However, However, you cannot take an exam part more than one time during a testing window. 1.13 MAINTAIN MAINTAINING ING YOUR YOUR CMA CMA DESIGNATI DESIGNATION ON

Membership Membership in the IMA is required to maintain your CMA certificat certificate. e. The annual CMA maintenance maintenance fee for regular members members is $30. The CMA Maintenance Maintenance Fee is payable at the time of a CMA member’s member’s renewal term. term. The Fee is used by ICMA to promote promote the CMA program to increase brand awareness awareness in the marketplace. marketplace. It also covers the administrative administrative costs costs of maintaining maintaining CMA records records and providing confirmatio confirmation n of one’s CMA credential credential to employers. employers. See the table of fees in Subunit Subunit 1.7 for other levels of membership. membership. There is no additional participan participantt fee. Continuing professional education is required of CMAs to maintain their proficiency in the field of management accounting. Beginning the calendar year after successful successful completion of the CMA CMA exam, 30 hours of CPE must be completed, completed, which which is about 4 days per year. Qualifying Qualifying topics topics include management 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 of ethics as part of their 30-hour annual CPE requireme requirement. nt. The focus of the ethics education education should be principally principally in the area of management accounting accounting and financial financial management. management. Topics should should include ethical considerations in the area of decision support, planning, and control for accounting and finance professionals working inside organizations. CMAs are encouraged to use education education sources that address specific scenarios, such as fraud in financial reporting, manipulation of budgets for personal gain, and disclosure of confidential financial information. Also acceptable is coverage of ethics within the 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 instructio instructional nal training training material. On-the-job On-the-job training training does not qualify. An affidavit affidavit from the employer employer is required to attest to the hours of instructio instruction. n. The programs programs may be seminars, seminars, workshops, workshops, technical technical meetings, meetings, or college college courses under the direction of an instructor. instructor. The method of instruction may include lecture, discussion, case studies, and teaching aids, such as training films and audios. Credit for hours of study may be given for technical articles published in business, professional, or trade journals, and for major technical talks given for the first time before business, professional, or trade organization organizations. s. The specific specific hours of credit credit in each case will be determined determined by the Institute. Institute.

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

10

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

1.14 STEPS STEPS TO TO BECOME BECOME A CMA CMA

1. 2.

Become Become knowledgeab knowledgeable le about about the exam, and determin determine e which which part you will will take take first. first. Purc Purcha hase se the the Glei Gleim m CMA Review System  (including books, Test Prep Software, Test Prep for Windows Mobile, Audio CDs, Gleim Online with your Personal Counselor, and Essay Wizard) to thoroughly prepare for the CMA CMA exam. Commit to systematic preparation for the exam as described in our review materials, including this booklet. 3. Communicat Communicate e with your Person Personal al Counselor Counselor to design design a study study plan that that meets meets your your needs. needs. Call (800) 874-5346 or email [email protected]. 4. Apply for members membership hip in in the the IMA IMA and in the the certifi certificatio cation n program. program. (See Subunit Subunit 1.7.) 1.7.) 5. Register Register to take the desired desired part part of the exam exam using using the examination examination registration registration form and send it with your application to the ICMA. See Study Unit 6, Subunit 2, for for more information on when each part of the exam is offered. You will receive authorization to take the the exam from the ICMA and will need to sit for the exam in the appropriate testing window based on when 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 your test test with Prometric (online, national 800 number, or call your local Prometric Prometric testing site). 7. Work systemati systematically cally through through each each study unit in the the Gleim Gleim CMA Review System . 8. Sit for for and PASS PASS the CMA exam exam while while you are in control, control, as described described in Study Unit 7 of this this booklet. Gleim Guarantees Success! 9. Email, fax, fax, mail, or call Gleim with with your comments on our study materials materials and how well well they prepared you for the exam. 10. Enjoy your career, career, pursue multiple multiple certifications (CIA, CPA, CPA, EA, etc.), etc.), and recommend Gleim to others who are also taking these these exams. Stay up-to-date on your Continuing Professional Education requirements with Gleim CPE. 1.15 PREPARI PREPARING NG FOR FOR CMA EXAM EXAM SUCCE SUCCESS SS

 A.

The Preparation Process -- In order to be successful on examinations, you need to undertake the following steps:

1.

Understand the exam, including its purpose, coverage, preparation, format, administration, and grading and pass rates. The better you understand the examination process from beginning to end, the better better you will perform. 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 Content Specification Outlines as well as CMA exams for over 30 years. years. We encourage comments and evaluations of our books after each exam as permitted by ICMA rules, ru les, which allows us to confirm that we had 100% coverage of the material tested or to learn what additional or  increased coverage is warranted. As a result of our due diligence, our Knowledge Knowledge Transfer  Outlines cover all subject matter matter tested on the CMA exam. Obtain and study the appropriate parts of the Gleim CMA Review System : Financial Planning, Performance, and  Control  and Financial Decision Making .

3.

Practice answering exam questions to perfect your exam-answering techniques.  Answering recent exam questions helps you understand un derstand the standards to which you will be held 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 answer  explanations that appear to the right of all questions. Our CMA Test Prep  Software and Test Prep for Windows Mobile require you to commit to an answer before consulting the discussion and answer explanation. Our answer explanations are intuitively appealing and easy to use.

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

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

b.

4.

Expect Expect the unexpected unexpected and adjust! adjust! Remember Remember that that your your sole sole objecti objective ve when when taking taking an examination is to maximize your score. The examination is curved and you must must outperform your peers. Being as comfortable and relaxed as possible possible gives you one advantage over your peers.

Develop confidence and ensure success with a controlled preparation program followed by confident execution and control during the examination.

a. b. B.

CMA Test Prep  Software and Test Prep for Windows Mobile contain about 2,500 questions, including hundreds not found in the books. We recommend that you use exclusively 20-question tests tests (in the test mode function). function). Immediately following each 20-question test session, you will be prompted to review the questions you marked and/or answered incorrectly. For each question, analyze and understand why you answered it incorrectly. This step is an essential essential learning activity. activity. The objective is to learn from your mistakes so you avoid them on the actual CMA exam.

Plan and practice exam execution. Anticipate the exam environment and prepare yourself  with a plan that includes includes the following: following: When will you arrive? How will you be dressed dressed (e.g., layered clothes)? How much time will you spend on each question? question? What will you bring?

a.

5.

11

You have already already achieved achieved a great great deal of of confidence confidence,, evidenced evidenced by your plan plan to take take the CMA exam. The Gleim System System for Success Success will will work for you!

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

1.16 OTHER CMA CMA REVIEW REVIEW MATERIALS, MATERIALS, SYSTEMS, SYSTEMS, AND COURSES

Gleim has been helping accountants pass the CMA exam since 1980! We have the experience and 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. You have to decide which programs are best for you. We, of course, want you to be successful with with Gleim, but we recognize that you will look at alternative methods and products and may well use one or more CMA 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 meeting with others to share an instructor or other educational techniques, while self study allows you to work on your own time at your own pace. Group study is presented with live instruction, as well as audio and/or video lectures. With this type of instruction, someone is usually available to make announcements and answer questions. Before you commit to a group gro up study course, investigate it thoroughly and make sure it suits your  needs. Attend introductory classes to meet the faculty and acquaint yourself with their knowledge transfer system. Make sure your instructor is a professor or professional educator, as some group study 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 video reviews. A combination of these materials is frequently used, as in the Gleim system. system. Again, the issue is how much knowledge (learning and understanding) is transferred to you. Your objective should be to pass the CMA exam, not to spend time and money on review programs.

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

12

SU 1: The CMA CMA Examination Examination:: An Overview  Overview 

1.17 HOW MUCH MUCH MONEY MONEY SHOULD SHOULD YOU YOU SPEND? SPEND?

You can spend thousands, but your success depends largely on your determination, how hard you work, and how much you learn and understand about 1. 2. 3. 4. 5.

The examin examinati ation on proces process. s. The knowledge knowledge (subject (subject matter) matter) tested tested on the exam. Answering Answering individual individual exam questions. questions. Taking Taking exams exams with low passing passing rates rates and low passing passing scores. scores. Control Control syste systems ms that assure assure the the best best possible possible performance performance..

Do not become distracted and waste time focusing on objectives other than the five listed above. 1.

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

2.

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

3.

AVOID being sold on predicti predictions ons of of the topics topics to be tested tested on the the next next exam. exam. The ICMA ICMA publishes Content Specification Outlines. All CMA review providers know the the subject matter to be tested. The Gleim system emphasizes understanding the core concept of all topics tested and the use of effective question-answering techniques to do well on each question. 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 study with the Gleim CMA Review System . We have found that that our most successful successful candidates apply Dr. 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, technical support, and a Personal Counselor. The Gleim CMA Review  books break down each respective exam topic part into 10 easily manageable study units. All study units include concise, concise, understandable, and extensive outlines followed by a summary of the core concepts presented and an array of multiplechoice questions with in-depth answer explanations. explanations. Each unit also has a practice essay essay question. The Gleim CMA Audio CDs are 30-minute (on average) summaries of each Gleim study unit presented by Knowledge Transfer Specialists to help reinforce the material. Our CMA Test Prep  Software contains hundreds of additional multiple-choice questions that are not offered in our books. Additionally, it has many useful useful features, including documentation of your  your  performance 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 to learn in an interactive environment that provides feedback. Each CMA Gleim Online  candidate has access to a Personal Counselor who helps h elps the candidate organize study plans that work with his/her  busy schedule. Essay Wizard gives you extra extra practice on essays in an exam-like exam-like environment.

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

13

STUDY UNIT TWO ICMA CONTENT SPECIFICATION OUTLINE (10 pages of outline)

2.1 2.2 2.2 2.3 2.3

CSO: Finan CSO: Financia ciall Planni Planning, ng, Perfor Performan mance, ce, and Con Contro trol l  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CSO: CS O: Finan Financi cial al De Deci cisi sion on Ma Maki king  ng  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The The Key Key to Pass Passin ing g the the CM CMA A Exam  Exam  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15  18  21

This study unit contains the ICMA Content Specification Outlines (CSOs) of the subject matter  tested on the CMA exam, which which are organized in outline format with areas, groups, and topics. There is 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 these percentages 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 the entire body of knowledge necessary to enter the management accounting profession. Thus, you will notice a lack of consistency in the number of groups under areas and the number of topics under  groups in relation to the percentage weights assigned to each area. Candidates are responsible for being informed on the most recent developments in the areas covered in the outlines, including understanding public pronouncements issued by accounting organizations 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 Establish the foundation foundation from which each examination examination will be develope developed. d.

2.

Provide Provide a basis for consistent consistent coverage coverage on each each examination examination..

3.

Communicate to interested parties more detail as to the content of each examination part.

4.

Assist Assist candidat candidates es in their their preparation preparation for each examination examination..

5.

Provide Provide informat information ion to those who offer offer courses courses designed designed to aid aid candidate candidates s in preparin preparing g for  the examinations.

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

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

14

SU 2: ICMA Content Specificat Specification ion Outline  Outline 

Levels of Coverage

1.

2.

3.

The cognitive skills that a successful candidate should possess possess and that should be tested tested on the 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 its organizational structure can be understood; ability to recognize causal relationships, discriminate between behaviors, and identify elements 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 of  operations; 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 the basis of consistency, logical accuracy, and comparison to standards; ability to appraise judgments involved in the selection of  a course of action (i.e., criticize, justify, conclude).

The three levels of coverage coverage can be defined defined as follows: 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.

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

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

15

SU 2: ICMA Content Specificat Specification ion Outline  Outline 

2.1 CSO: CSO: FINANCIAL FINANCIAL PLANN PLANNING, ING, PERFO PERFORMAN RMANCE, CE, AND AND CONTROL CONTROL ICMA CONTENT SPECIFICATION OUTLINES

GLEIM STUDY UNITS

Part 1 - Financial Planning, Performance, Performance, and Control Control A. Planning, Planning, Budgeting, Budgeting, and Forecasting Forecasting (30% - Levels A, B, and C) 1. Budgeting Budgeting concepts  concepts 

a. b. c. d.

1. Budgeting Concepts and Forecasting Techniques

Operations and performance goals Characteristics of a successful budget process Resource Resource allocation allocation Other budgeting budgeting concepts concepts

2. Forecasti Forecasting ng techniq techniques  ues 

a. b. c. d. e.

Regression Regression analysis analysis Learning Learning curve analysis analysis Exponential Exponential smoothing smoothing Time series series analysi analysis s Expected Expected value

3. Budgeting Budgeting methodolo methodologies  gies 

a. b. c. d. e. f.

Annual business plans (master budgets) budgets) Project Project budgeting budgeting Activity-base Activity-based d budgeting budgeting Zero-based Zero-based budgeting budgeting Continuous Continuous (rolli (rolling) ng) budgets budgets Flexible Flexible budgeting budgeting

2. Budget Methodologies and Budget Preparation

4. Annual profit profit plan and supporting supporting schedules  schedules 

a. Operational Operational budgets budgets b. Financial Financial budgets budgets c. Capital Capital budgets budgets 5. Top-level Top-level plannin planning g and analysis  analysis 

a. Pro forma income b. Financial Financial statemen statementt projections projections c. Cash flow projections projections B. Performance Performance Manageme Management nt (25% - Levels A, B, and C) 1. Cost and and variance variance measures  measures 

a. b. c. d. e.

7. Cost and Variance Measures

Comparison of actual to planned results Use of flexible budgets to analyze performance Management Management by exception exception Use of of standard standard cost systems systems Analysis of variation from standard cost expectations

2. Responsibility centers and reporting segments 

a. Types of responsib responsibility ility centers b. Transfer Transfer pricing pricing models c. Reporting of organizational segments

8. Responsibility Accounting and Performance Measures

3. Performanc Performance e measur measures  es 

a. b. c. d. e. f. g. h. i.

Product Product profitabil profitability ity analysis analysis Business unit profitability analysis Customer Customer profitabi profitability lity analysis analysis Return on investment investment Residual Residual income Investment Investment base issues Effect of interna international tional operations operations Critical Critical success success factors Balanced Balanced scorecard scorecard

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

16

SU 2: ICMA Content Specificat Specification ion Outline  Outline 

ICMA CONTENT SPECIFICATION OUTLINES

GLEIM STUDY UNITS

Part 1 - Financial Planning, Performance, Performance, and Control Control C. Cost Managemen Managementt (25% - Levels A, B, and C) 1. Measuremen Measurementt concep concepts  ts 

3. Cost Management Terminology and Concepts

a. Cost behavior behavior and cost cost objects objects b. Actual and normal costs c. Standard Standard costs d. Absorption Absorption (full) costing costing e. Variable Variable (direct) (direct) costing f. Joint and by-product by-product costing costing

5. Cost Allocation Techniques

2. Costing Costing systems  systems 

a. b. c. d.

Job order costing Process Process costing costing Activity-base Activity-based d costing costing Life-cycle Life-cycle costing

4. Cost Accumulation Systems

3. Overhead Overhead costs 

a. b. c. d.

Fixed and variable overhead expenses Plant-wide versus departmental overhead Determinatio Determination n of allocati allocation on base base Allocation of service department costs

5. Cost Allocation Techniques

4. Operation Operational al effici efficiency  ency 

a. b. c. d.

Just-in-time Just-in-time manufacturin manufacturing g Material requirements planning (MRP) Theory of constraints and throughput costing Capacity management and analysis

6. Operational Efficiency and Business Process Performance

5. Business Business process process perfor performance  mance 

a. b. c. d. e. f. g. h.

Value chain analysis analysis Value-added Value-added concepts concepts Process Process analysis analysis Benchmarking Benchmarking Activity-base Activity-based d managem management ent Continuous Continuous improvement improvement concepts concepts Best practice practice analysi analysis s Cost of of quality quality analysis analysis

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

17

SU 2: ICMA Content Specificat Specification ion Outline  Outline 

ICMA CONTENT SPECIFICATION OUTLINES

GLEIM STUDY UNITS

Part 1 - Financial Planning, Performance, Performance, and Control Control D. Internal Internal Controls Controls (15% - Levels Levels A, B, and C) 1. Risk assessment, assessment, control controls, s, and risk management  management 

9. Internal Controls I

a. Internal control structure and management philosophy b. Internal control policies for safeguarding and assurance c. Internal Internal control risk d. Implications of the Sarbanes-Oxley Act of 2002 e. U.S. Foreign Corrupt Practices Act internal control requirements f. COSO Internal Internal Control Control Framework Framework 2. Internal Internal auditing  auditing 

a. Responsibility and authority of the internal audit function b. Types of audits conducted by internal auditors 3. System control controls s and security security measures  measures 

a. b. c. d. e. f.

General General accounting accounting system controls controls Application and transaction controls Network Network controls controls Flowchartin Flowcharting g to assess assess controls controls Backup controls controls Disaster Disaster recovery recovery procedures procedures

10. Internal Controls II and Ethics for Management Accountants

E. Professiona Professionall Ethics (5% - Levels Levels A, B, and C) 1. Ethical considerations for management  accounting and financial management  professionals 

a. Provisions Provisions of the IMA Statement of Ethical  Professional Practice  b. Evaluation and resolution of ethical issues such as ● ● ●

●

Fraudulent reporting Manipulation of analyses and results Unethical behavior in developing budgets and standards Manipulation of decision factors

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

18

SU 2: ICMA Content Specificat Specification ion Outline  Outline 

2.2 CSO: CSO: FINANCIAL FINANCIAL DECISION DECISION MAKI MAKING NG ICMA CONTENT SPECIFICATION OUTLINES

GLEIM STUDY UNITS

Part 2 - Financial Decision Making A. Financial Financial Statement Statement Analysis Analysis (25% - Levels A, B, and C) 1. Basic financ financial ial statement statement analysis  analysis 

a. b. c. d.

1. Basic Financial Statement Analysis

Common size financi financial al statements statements Common base year year financial statements Growth analysis analysis Purposes and components components of financial statements

2. Financial performance metrics metrics – Financial ratios 

a. Liquid Liquidity ity b. Levera Leverage ge c. Activity Activity d. Profitability Profitability e. Market Market 3. Profitabil Profitability ity analy analysis  sis 

a. b. c. d. e. f.

2. Financial Performance Metrics – Financial Ratios

3. Profitability Analysis and Analytical Issues

DuPont analysis analysis Income measurement measurement analysis analysis Revenue Revenue analysis analysis Cost of sales sales analysi analysis s Expense Expense analysis analysis Variation Variation analysis analysis

4. Analytica Analyticall issues in financial financial accountin accounting  g 

a. b. c. d.

Impact of foreign foreign operations operations Effects of changing prices and inflation Off-balanceOff-balance-sheet sheet financing financing Cash flow statement reconciliation to income statement e. Impact of changes changes in account accounting ing treatment treatment f. Internationa Internationall Financia Financiall Reporting Reporting Standards Standards (IFRS) g. Fair value accounting accounting h. Differences in in accounting and economic concepts of value and income i. Earnin Earnings gs qualit quality y B. Corporate Corporate Finance Finance (25% - Levels Levels A, B, and C) 1. Ris Risk k and and retur return  n 

a. b. c. d. e. f.

4. Investment Risk and Portfolio Management

Calculating Calculating return Types of risk Relationship Relationship between between risk and and return return Risk and and return in a portfolio portfolio context context Diversificat Diversification ion Asset pricing pricing models

2. Managing Managing finan financial cial risk 

a. Portfolio Portfolio management management b. Hedgin Hedging g c. Financial Financial risk management management

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

19

SU 2: ICMA Content Specificat Specification ion Outline  Outline 

ICMA CONTENT SPECIFICATION OUTLINES

GLEIM STUDY UNITS

Part 2 - Financial Decision Making 3. Financial Financial instrumen instruments  ts 

a. b. c. d. e. f. g.

Term structur structure e of interest interest rates Bond Bonds s Debt management management Common stock Preferred Preferred stock Options Options and other derivatives derivatives Valuation of financial instruments

5. Financial Instruments and Cost of Capital

4. Cost Cost of capita capital  l 

a. b. c. d.

Weighted Weighted average average cost cost of capital capital Cost of individual capital components Calculating Calculating the cost cost of capital capital Marginal Marginal cost cost of capital capital

5. Managing Managing curren currentt assets  assets 

a. b. c. d. e. f. g.

Working Working capital capital terminol terminology ogy Cash management management Marketable Marketable securiti securities es managemen managementt Accounts Accounts receivabl receivable e management management Inventory Inventory management management Types of short-term short-term credit Minimizing the cost of short-term credit

6. Managing Current Assets

6. Raisi Raising ng capital  capital 

a. b. c. d. e. f. g. h.

Financial markets and regulation Market efficiency efficiency Financial Financial institutions institutions Initial Initial public public offerings offerings Secondary Secondary offerings offerings Dividend Dividend policy and share repurchases repurchases Private Private placements placements Lease financing financing

7. Raising Capital, Corporate Restructuring, and International Finance

7. Corporate Corporate restructur restructuring  ing 

a. Mergers Mergers and and acquisiti acquisitions ons b. Divestitures Divestitures c. Bankru Bankruptc ptcy y 8. Internatio International nal finance  finance 

a. b. c. d. e.

Fixed, flexible, flexible, and floating exchange rates Managing Managing transactio transaction n exposure exposure Financing Financing internation international al trade trade Transfer pricing tax implications Political Political risk

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

20

SU 2: ICMA Content Specificat Specification ion Outline  Outline 

ICMA CONTENT SPECIFICATION OUTLINES

GLEIM STUDY UNITS

Part 2 - Financial Decision Making C. Decision Decision Analysis and Risk Risk Management Management (25% - Levels A, B, and C) 1. Cost-volu Cost-volume-pro me-profit fit analysis  analysis 

8. Decision Analysis and Risk Management

a. Breakeven Breakeven analysis analysis b. Profit performance and alternative operating levels c. Analysis Analysis of multiple multiple products products 2. Marginal Marginal analysis  analysis 

a. Sunk costs, opportunity costs, and other related concepts b. Marginal costs and marginal revenue c. Special Special orders orders and pricing pricing d. Make versus buy e. Sell or process process further  further  f. Add or drop a segment segment g. Capacity Capacity conside consideration rations s 3. Pricin Pricing  g 

a. b. c. d. e. f.

Market comparables comparables Setting Setting prices prices Target Target costing costing Elasticity Elasticity Product life cycle considerations Market structure structure consideratio considerations ns

4. Risk assessment  assessment 

a. Risk identifi identification cation and exposure exposure b. Definition and scope of operational risk, hazard risk, financial risk, and strategic risk c. Risk mitigation mitigation strategies strategies d. Enterprise Enterprise risk risk managem management ent D. Investment Investment Decisions Decisions (20% - Levels A, B, and C) 1. Capital Capital budgeti budgeting ng process  process 

9. Investment Decisions I

a. Stages of capital capital budgeti budgeting ng b. Incremental Incremental cash flows c. Income tax considerati considerations ons 2. Discounted Discounted cash cash flow flow analysis  analysis 

a. Net present present value value b. Internal Internal rate rate of return c. Comparison Comparison of NPV NPV and and IRR 3. Payback Payback and discou discounted nted payback  payback 

a. Uses of payback payback method b. Limitations Limitations of payback payback method method c. Discounted Discounted payback payback 4. Ranking Ranking investment investment proje projects  cts 

a. Ranking Ranking methods methods b. Capital Capital rationing rationing c. Mutually Mutually exclusi exclusive ve project projects s

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

21

SU 2: ICMA Content Specificat Specification ion Outline  Outline 

ICMA CONTENT SPECIFICATION OUTLINES

GLEIM STUDY UNITS

Part 2 - Financial Decision Making 5. Risk analysi analysis s in capital capital investment  investment 

a. Sensitivity Sensitivity analysis analysis b. Certainty Certainty equivalents equivalents c. Real options options

10. Investment Decisions II and Ethical Considerations for the Organization

6. Valuat Valuation  ion 

a. b. c. d.

Discounted Discounted cash cash flow flow models models Multiple Multiple models models Valuation for acquisitions and divestitures Discount Discount rates

E. Professiona Professionall Ethics (5% - Levels Levels A, B, and C) 1. Ethical considerations considerations for the organization 

a. Anti-bribery provisions of the U.S. Foreign Corrupt Practices Act b. Provisions of IMA’s Statement on Management  Accounting, “Values and Ethics: From Inception to Practice” c. Corporate responsibility for ethical conduct

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 KEY TO PASSING PASSING THE CMA CMA EXAM EXAM

The CMA exam tests a large amount of subject matter that candidates must study and review, a process 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 CMA exam. This booklet, booklet, CMA Review: Review: A System for for Success  Success , assists the CMA candidate beyond the actual studying of the subject matter tested. It facilitates preparation for success success on the CMA exam and demonstrates the difference difference between passing and failing. Re-examination candidates benefit immensely from this material as well. Preparation is the key: Know what to expect and what to do to pass the exam! Notice the similarity of being prepared and being in control. When you are prepared, you know what to expect and what to do! Control yields confidence. Control is exactly what what Gleim CMA Review  gives you.

Be positive! View CMA preparation and the exam as a challenge that will be fun when you are in control. You will PASS if you 1.

Study and understand understand the inform information ation in this this booklet. booklet.

2.

Work through through each study unit in in the current current edition edition of 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 Each 20-que 20-questi stion on test test in CMA Test Prep  Software and Test Prep for  Windows Mobile takes only 30 minutes and should be viewed as a challenging, exciting game in which you continually improve with practice.

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

22

SU 2: ICMA Content Specificat Specification ion Outline  Outline 

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 achieving success. success. This booklet, booklet, CMA Review: Review: A System System for Success  Success , was specifically specifically written for this purpose.

Learn and understand the subject matter tested.

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

Perfect your question-answering techniques by answering recent exam questions.

Our Test Prep Software and Test Prep for Windows Mobile are designed to help you use control systems to answer each type of question and to take each part part of the exam. They have thousands thousands of multiple-choice questions to acclimate you to a test-taking environment.

Plan and practice exam execution.

●

●

Develop the confidence you need to succeed.

Use the Gleim INTERACTIVE system of books, Test Prep Software, Test Prep for Windows Mobile, Audio CDs, Gleim Online, and Essay Wizard. Even the books books are interactive, interactive, with complete answer explanations to the immediate right of each question. Study Unit 6 of this booklet explains the tactics that our most successful candidates use. Implement STUDY DISCIPLINE developed by control systems to prepare you for the exam. The Gleim system encourages study discipline, a tremendous aid to CMA candidates.

The Gleim 20 easy-to-complete study units promote confidence and a sense of accomplishment after  completing 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 our  books, Test Prep Software, Test Prep for  Windows Mobile, Audio CDs, Gleim Online, and/or Essay Wizard. INTUITIVELY APPEALING presentations and explanations facilitate your study effort. Experience LESS FATIGUE while using our  books due to their special indentations and line spacing.

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

23

STUDY UNIT THREE EXAM PREPARATION, ADMINISTRATION, AND GRADING (4 pages of outline)

3.1 3.1 3.2 3.2 3.3 3.3 3.4 3.4 3.5 3.6 3.7

The The No Nond ndis iscl clos osed ed Exam  Exam  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pret Pretes esti ting ng Ques Questi tion ons  s  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The The CM CMA A Exam Exam Form Format  at  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How Ho w Ethi Ethics cs are are Test Tested  ed  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Regist Reg isteri ering ng and Prepar Preparing ing for the Exam  Exam  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Grading  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pass Rates  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23  24  24  24  24  25  26 

Recall that one of the steps to exam success is understanding all there is to know about the examination process and its implications implications in order to maximize your exam score. You need to know how the exam is prepared so you know what to expect in both subject matter and question formats and also so you have confidence in the fairness and security of the exam. Exam administration procedures directly affect your exam-taking techniques. This study unit consists primarily of a detailed listing of procedures and rules used to administer the exam. Remember, the more you know about the examination process and what to expect, the bigger  your competitive advantage over others taking the exam. You may choose to skim this study unit, which contains details of the administration of the examination and the content of the parts. parts. You should return and study this study study unit after you read Study Unit 7, “How to Take Take the CMA Exam,” so you you know exactly what to expect. Leave nothing to chance, and be in total control of the examination process. 3.1 THE NONDISCL NONDISCLOSE OSED D EXAM EXAM

The CMA is a nondisclosed exam for three reasons: 1. 2. 3.

Pretest objective items (i.e., questions) to assemble a large, high-quality item bank. Statistica Statistically lly equate equate each each examinat examination ion for for differenc differences es in the the level level of diffic difficulty. ulty. Facilitate Facilitate computer computer adminis administrati tration on of the CMA CMA examinat examination ion in the future. future.

How does the nondisclosed exam affect you as a CMA candidate? candidate? Very little, except you will be required to sign an attestation, and you will be warned about the disastrous consequences of disclosing information about specific questions and/or answers. Gleim CMA Review  will continue to be the industry leader. We have been writing, writing, editing, and answering CMA and other professional exam-type exam-type questions since 1980! Expect to see fresh, new questions from your authors in the Gleim CMA Review  materials. To maintain our competitive edge, we ask you and other CMAs and CMA candidates for feedback and suggestions on how to improve our materials with emphasis on topics to be strengthened and/or  added. We provide evaluation and feedback forms at the back of each of our books books for your comments and 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 and preparing you for what will be required. We also help you avoid overpreparation. We change our  approach and subject matter coverage as the exam changes.

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

24

SU 3: Exam Preparation, Preparation, Administratio Administration, n, and Grading 

3.2 PRETEST PRETESTING ING QUESTION QUESTIONS S

The ICMA pretests multiple-choice 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 FORMAT

CMA candidates must complete complete two examination parts. The CMA examination is given in a computer-based format. Both parts consist of 100 carefully carefully constructed multiple-choice questions questions and two essay questions. questions. Both written and quantitative responses will will be required. ICMA’S CMA CONTENT SPECIFICATION OUTLINE OVERVIEW Part 1: Financial Financial Planning, Planning, Performance, Performance, and Control Control

Planni Planning, ng, Budget Budgeting ing,, and Foreca Forecasti sting ng Performance Management Cost Management Internal Controls Professional Ethics

Part 2: Financial Financial Decision Decision Making Making

30% 25% 25% 15% 5%

Financial Statement Analysis Corporate Finance Decision Decision Analysis Analysis and Risk Management Management Investment Decisions Professional Ethics

25% 25% 25% 20% 5%

Your CMA exam should be made up of questions that reflect the ICMA Content Specification Outlines, delivered in random order (i.e., not reflective of the order the topics are presented in the CSOs). (See Study Unit 2.) When taking the exam, your concern is with answering each question to the best of your ability, not with the topical coverage. Expect the unexpected unexpected and deal with it. The more difficult the exam, the better for you because you will be more suitably prepared to maximize your  score. Remember, only the top candidates PASS! 3.4 HOW ETHICS ETHICS ARE TESTED TESTED

Ethical issues and considerations will be tested from the perspective of the individual in Part 1 and from the perspective of the organization organization in Part 2. Candidates will be expected to evaluate evaluate the issues involved and make recommendations for the resolution of the situation. 3.5 REGISTE REGISTERING RING AND AND PREPARIN PREPARING G FOR THE EXAM EXAM

 After registering for an exam part, the ICMA will send you authorization to take the exam within a specified 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 is www.prometric.com/ICMA, www.prometric.com/ICM A, or you may call the Prometric registration office at (800) 479-6370 and schedule your test at a local Prometric testing center.  As soon as the ICMA sends you a computer-based test authorization, contact Prometric to schedule your test at a convenient time (within the appropriate testing windows) windows) and testing center. In almost all cases, you should be able to drive to your testing site, take the test, and return home in one day. If the exam is not being given within driving distance of your home, research suitable hotel accommodations on the Internet. Stay by yourself at a hotel to ensure that you avoid avoid distractions. The hotel room should be soundproof and have a comfortable 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 rest in the weeks before you take take your exam are very important. High energy levels, reduced tension, and an improved improved attitude are among the benefits. A good aerobic fitness program, a nutritious and well-balanced diet, and a regular sleep pattern will promote your longterm emotional and physical well-being as well well as contribute significantly to to favorable exam results. Of  course, the use of health-undermining substances should be avoided.

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

SU 3: Exam Preparation, Preparation, Administratio Administration, n, and Grading 

25

Plan ahead and systematically prepare. Then go to the exam and give it your best; neither you nor  anyone 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 or  during the exam. An optimist will usually do better better than an equally well-prepared pessimist. Remember, you have reason to be optimistic because you will be competing with many less-qualified persons 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 your  time 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 GRADI GRADING NG

You will not receive immediate pass/fail results on your CMA exam because the essays must be graded offline at a later time. The scores will be mailed approximately approximately 6 weeks after the close close of the testing 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 total weighted score of pass/fail reflected reflected in a scaled score for the entire entire part. You MUST score at least 50% on the multiple-choice section of the the exam to be allowed to take the the essay section. This requirement ensures that test takers do not proceed pro ceed with the essay section if they do not have a chance of achieving a passing score for the entire exam. 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 a passing score for each form, taking into consideration the relative difficulty of the items contained in each form. In order to equate all scores for all forms of the exam, the scores for each part are placed along a scale from 0 to 500. On this scale, a score of 360 represents the minimum passing scaled score. One form of the exam might require a passing percentage of 70% and another a passing percentage of 65%; both of these passing percentages would represent a scaled score of 360. The scaled 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 should try to score more than 75% in both the multiple choice and essay sections. Candidates are not required 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 than another question. All questions are of equal point value. The individual questions questions do determine determine the relative difficulty of the entire set of questions, or “form,” “form,” of the exam. When a candidate takes an exam, a set of questions is randomly selected. Each question included in the set of questions has a difficulty rating that, together with all the other questions, determines the relative difficulty of that particular set of questions. This relative difficulty determines the number of questions that must be answered correctly in order to pass. A relatively difficult exam will will require fewer correct items than than an easier exam. There is no penalty for incorrect answers. Therefore, you should select an option that that seems reasonable rather than leave an answer blank, particularly if you can eliminate one or two of the options as being incorrect. This strategy of educated guessing is covered more thoroughly in Study Unit 4.

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

26

SU 3: Exam Preparation, Preparation, Administratio Administration, n, and Grading 

3.7 3.7

PASS PA SS RATES RATES

Two-Part CMA Exam:

PART PART 1 – Fina Financ ncia iall Plan Planni ning ng,, Perf Perfor orma manc nce, e, and and Cont Contro roll PART 2 – Financial Decision Making Transition Exam Four-Part CMA Exam:

PART 1 – Business Analysis PART 2 – Management Accounting and Reporting PART 3 – Strategic Management PART 4 – Business Applications

May 1, 2010 – October 31, 2010

40% 40% 36% 48% July 1, 2009 – June 30, 2010

July 1, 2004 – June 30, 2009

51% 35% 36% 58%

52% 54% 57% 60%

 A major difference among CMA candidates candidates is their preparation program. You have access to the best CMA review material; it is up to you to use it. it. Conversely, if you do not apply the suggestions in this booklet, CMA Review: Review: A System for Success  Success , you will be at a disadvantage to the thousands of  candidates who will pass with with Gleim. Even if you are enrolled in a review course course that uses other  manuals, 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 understand why Gleim has helped more CMA candidates than any other program.

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

27

STUDY UNIT FOUR MULTIPLE-CHOICE QUESTIONS (7 pages of outline)

4.1 4.1 4.2 4.3 4.4 4.5 4.6 4.6 4.7 4.7 4.8

CMA Exam CMA Exam Part Parts  s  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Multip Multiplele-Cho Choice ice Questi Questions  ons  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less Traditio Traditional nal MultipleMultiple-Choi Choice ce Questions  Questions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Multip Multiplele-Cho Choice ice at Prome Prometri tric  c  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MultipleMultiple-Choic Choice e QuestionQuestion-Answe Answering ring Technique  Technique  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . If You You Do Don’ n’tt Know Know the the Answ Answer  er  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Answ Answer er Expl Explan anat atio ions  ns  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Practici Practicing ng MultipleMultiple-Choic Choice e Time Budgeting Budgeting and Control  Control  . . . . . . . . . . . . . . . . . . . . . . . . . . .

27  28  28  30  31 32  32  33 

This study unit (“Multiple-Choice Questions”) and Study Unit 5 (“Essay Questions”) explain question formats that appear on the CMA exam. We also explain how to budget your time time for each part and suggest a question-answering technique for each question format. You will probably recognize that your question-answering technique is a specific control system application. We cannot say that your question-answering technique control system is more important than your  other 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 performance on the CMA exam when you are poised to maximize your points on every question. 4.1 CMA EXAM EXAM PA PARTS RTS

There are two parts to the CMA exam. Part 1: Financial Planning, Performance, and Control  Part 2: Financial Decision Making  Both parts include 100 multiple-choice questions questions and two essay questions. The multiple-choice questions will be delivered in random order, meaning that the order of questions will not reflect the order in which the topics are presented in the CSOs. Four hours is allowed for the completion completion of an entire part (3 hours for the multiple-choice, 1 hour for the essays). If you complete your 100 multiplemultiplechoice questions by allocating 1.5 minutes minutes per question, you will have 30 minutes minutes to review. Use as much of this time to review review as you need, and then move on to to the essays. Your unused multiple-choice section 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 time remaining clock when you have finished all 100 of your multiple-choice questions. If you have more than 30 minutes, do a thorough review of your marked questions, make sure you have answered all 100 questions, and move on to the essays knowing you have plenty of time. If you finish finish with less than 30 minutes, do not panic. Remain calm and in control. Make sure you have 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 study study unit for more information on time-budgeting, control, and question-answering techniques for the multiple-choice section.

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

28

SU 4: Multiple-Cho Multiple-Choice ice Questions  Questions 

4.2 MULTIPLE MULTIPLE-CHO -CHOICE ICE QUESTIO QUESTIONS NS

Multiple-choice questions consist of a stem (the question) and four four answer choices. One answer is correct, and three answer choices are incorrect. Another view is that there is one answer choice that is the best response to the question stem. stem. Two CMA multiple-choice questions appear below. Part 1 1. Which one of the following best describes direct labor?   A. A. B. C. D.

A prim prime e cost cost.. A peri period od cost. cost. A prod produc uctt cost. cost. Both a product product cost and a prime cost.

Part 2 2. Hi-Tech, Inc. has determined that it can minimize its weighted average cost of capital (WACC) by using a debt-equity ratio of 2/3. If the firm’s cost of debt 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’s WACC? 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 illustrated below. Which of the following is not a method of financing international trade?  All of the following statements in regard to working capital are true except

These negative stems ask for the false answer choice, which is accompanied by three true answer  choices. Expect a few multiple-choice questions with negative stems on the exam. exam. Presumably, the ICMA will print these negative words in bold type, as illustrated above. 4.3 LESS TRADITIONAL MULTIPLE-CHOICE MULTIPLE-CHOICE QUESTIONS QUESTIONS

Other types of multiple-choice questions include 1. 2. 3.

Questions Questions with two or three answer answer options options Questions Questions with two, three, or four four variables variables in each each answer  answer  Graphi Graphic c represe representa ntatio tions ns

Occasionally, the ICMA converts two- and three-answer multiple-choice questions into four-answer  multiple-choice questions. Mark each of the I, II, II, III, and IVs as true or false. 3. Mega, Inc., Inc., a large conglome conglomerate rate with operati operating ng divisions in many industries, uses risk-adjusted discount rates in evaluating evaluating capital investment investment decisions. Consider  the following statements concerning Mega’s use of  risk-adjusted discount rates: I. II. III. IV.

Mega may accept some investments investments with internal internal rates of return less than Mega’s overall average cost of capital. Discount Discount rates vary depending depending on the type of  investment. Mega may reject some investments investments with internal internal rates of return greater than the cost of capital. Discount Discount rates rates may vary vary depend depending ing on the the division division..

Which of the above statements are correct?   A. A. B. C. D.

I and and III only only.. II and and IV only only.. II, III, III, and and IV only only.. I, II, III, III, and and IV.

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

29

SU 4: Multiple-Cho Multiple-Choice ice Questions  Questions 

Other multiple-choice questions have several variables (or answers) within each answer option and are presented in columns. Circle the correct answer in each column. column. 4. The costing method that is properly classified for both external and internal reporting purposes is External Reporting A. Activity-based costing B. Job-order costing C. Variable costing D. Process costing

No No No No

Internal Reporting Yes Yes Yes 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 is the optimal position, which one of the following statements best explains the saucer or U-shaped curve?  A.

The composition composition of debt and equity does not affect the firm’s cost of capital.

B.

The cost of capital capital is almost always always favorably favorably influenced by increases in financial leverage.

C.

The cost of capital capital is almost always always negativ negatively ely influenced by increases in financial leverage.

D.

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

The correct answers and answer explanations for sample questions 1 through 5 are presented beginning on page 32. The previous discussion has illustrated the types of multiple-choice questions you can expect to see on the CMA exam. Remember to answer all questions. Your grade will be based based on the total number of correct answers; there is no penalty for guessing. Conceptual vs. Calculation Questions

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

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

30

SU 4: Multiple-Cho Multiple-Choice ice Questions  Questions 

4.4 MULTIPLE MULTIPLE-CHO -CHOICE ICE AT AT PROMETR PROMETRIC IC

Prometric Computer Screen Layout

 A menu offering a number of options is displayed at the bottom of the question screen. You may select an option by pressing the appropriate symbol key or highlighted letter on your keyboard or by clicking on the symbol or letter with your mouse. 1.

Question Question Number: Number: Remember, Remember, there are 100 multiple-c multiple-choice hoice questions questions in each each part.

2.

Time Remaining: Remaining: Always Always in hours, hours, minutes, minutes, and seconds. seconds.

3.

Review Review Items: Items: Review Review questions questions and end the quiz.

4.

Questi Question: on: Click Click best best answer answer..

5.

Mark for Review: Review: Any question question you you wish wish to return return to. Keep these to a minimum minimum while while doing practice exams and on your real CMA exam so as to maintain the 1.5 minutes per question time budget. You can indicate indicate the letter  letter M on your keyboard.

6.

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

7.

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

8.

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

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

SU 4: Multiple-Choice Questions 

31

4.5 MULTIPLE-CHOICE MULTIPLE-CHOICE QUESTION-ANSWERING QUESTION-ANSWERING TECHNIQUE

The following suggestions are to assist you in maximizing your score on each part of the CMA exam. Remember, knowing how to take the exam and how to answer individual questions is as important as studying/reviewing the subject matter tested on the exam. 1.

Budget your time.

a. b.

c. 2.

Answer the questions in consecutive order.

a. b. c.

3.

We make make this this point point with with emphas emphasis. is. Just as you you would would fill fill up your gas tank tank prior prior to to reaching empty, so too should you finish your exam before time expires. You have have 180 180 minutes minutes to answer answer 100 100 question questions, s, i.e., i.e., 1.8 minutes minutes per questio question. n. We suggest you allocate 1.5 minutes per question. This would result in completing 100 questions in 150 minutes to give you 30 minutes to review questions that you have marked. [See 3.f. on the next page for a brief discussion on marking questions at Prometric.] On your Prometric Prometric computer computer screen, screen, the the time time remaining remaining (start (starting ing with with 3:00:00) 3:00:00) appears at the lower left corner of your screen. Do not agonize over any one item or question. Stay within your time budget. Mark any questi questions ons you you are unsure of and and return return to to them later. later. Never leave a multiple multiple-choic -choice e question question unanswered. unanswered. Make your best guess in the the time allowed. Remember that your score is based on the number of correct responses. You will not be penalized for guessing incorrectly. incorrectly.

For each multiple-choice question,

a.

Try to ignore the answer choices. Do not allow the answer choices to affect your  reading of the question.

1)

b.

If four four answer answer choices choices are presente presented, d, three three of them are are incorrect incorrect.. These choices choices are called distractors for good reason. Often, distractors are written to appear  correct at first glance until further analysis. 2) In computational computational items, items, the the distractors distractors are carefully calculated calculated such such that they are the result of making common common mistakes. Be careful, and double-check your  computations if time permits. Read the question carefully to determine the precise requirement. 1)

Focusing on what is required enables you to ignore extraneous information, information, to to focus on the relevant facts, and to proceed directly to determining the correct answer. a)

c. d.

Be especial especially ly careful careful to note note when when the the requireme requirement nt is an exception ; e.g., “All of the following statements regarding a company’s internal rate of  return are true except:” Determine the correct answer before looking at the answer choices. Read the answer choices carefully. 1)

2) e.

Even ifif the first answer appears to be the correct correct choice, choice, do not skip the remaining answer choices. Questions often ask for the “best” of the choices provided. Thus, each choice requires your consideration. Treat each answer answer choice choice as a true/f true/false alse questio question n as you analyze analyze it.

Click on the best answer.

1) 2)

If you you are uncert uncertain, ain, guess guess intelli intelligently gently.. Improve Improve on your your 25% 25% chance chance of getting getting the correct answer with blind guessing. For many many multiple-choice multiple-choice questions, two answer choices choices can be eliminated with minimal effort, thereby increasing an educated guess to a 50-50 proposition.

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

32

SU 4: Multiple-Cho Multiple-Choice ice Questions  Questions 

f.

As you you answer answer a question, question, you can can mark mark it by pressin pressing g the “Mark” “Mark” button button or or unmark unmark a marked question by pressing the “Marked” “Marked” button. After you have answered, marked, or looked at and not answered all 100 questions, you will be presented with a review screen that shows how many questions you did d id not answer and how many you marked. You then have the option of revisiting all of the unanswered questions and “marked” questions. 1) 2) 3)

Answer Answer all of the the questio questions ns you you did did not not answer. answer. Go back back to the the marked marked questions questions and review review your answer answer choices. Verify that all questions questions have been answered. answered.

4.6 IF YOU YOU DON’T DON’T KNOW KNOW THE ANSWE ANSWER R

Guess, but make it an educated educated guess, which means select the best possible answer. First, rule out answers that you think are incorrect. Second, speculate on what the ICMA ICMA is looking for and/or the rationale behind the question. Third, select the best answer answer or guess between equally appealing answers. Unless you made an obvious mistake mistake or computational error, try to to avoid changing answers. Your first guess is usually the most intuitive. in tuitive. If you cannot make an educated guess, read the question and each answer and pick the best or  most intuitive intuitive answer. It’s just a guess! 4.7 ANSWER ANSWER EXPLANA EXPLANATION TIONS S

Here are the answer explanations for the multiple-choice questions presented in this this study unit. It is crucial that you understand why you misanswered each question in your study program. The better  you understand why you make mistakes, the fewer you will make on your CMA exam! 1. Answer (D) is correct. 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 of  output and are deferred to future periods to the extent that output is not sold. Prime costs are defined as direct materials and direct labor.  Answer (A) is incorrect. Direct labor is also a product cost. Answer (B) is incorrect. A period cost is expensed when incurred. Direct labor cost is inventoriable.  Answer (C) is incorrect. Direct labor is also a prime cost.

2. Answer (C) is correct. 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 each component of the financing structure by its proportion of the financing structure as a whole. whole. Hi-Tech’s WACC can be calculated as follows: Component Debt Equity

Weight 40% × 60% ×

Component Cost 5.4% = 12.0% =

Totals 2.16% 7. 7.20% 9.36%

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

3. Answer (D) (D) is correct. correct. (CMA, adapted) REQUIRED: The true statement about use of riskadjusted discount rates DISCUSSION: Risk analysis attempts to measure the likelihood of the variability of future returns from the proposed investment. Risk can be incorporated into capital budgeting decisions in a number of ways, one of which is to use a hurdle rate higher than the firm’s cost of capital, that is, a risk-adjusted discount rate. This technique adjusts the interest rate used for discounting upward as an investment becomes riskier. The expected flow from the investment must be relatively larger, or the increased discount rate will generate a negative net present value, and the proposed acquisition will be rejected. Accordingly, the IRR (the rate rate at which the NPV is zero) for a rejected investment may exceed the cost of capital when the risk-adjusted rate is higher than the IRR. Conversely, the IRR for an accepted investment may be less than the cost of capital when the risk-adjusted rate is less than the IRR. In this case, the investment presumably has very little risk. Furthermore, risk-adjusted rates may also reflect the differing degrees of  risk, not only among investments, but by the same investments undertaken by different organizational subunits.  Answer (A) is incorrect. Discount rates may vary with the project or with the subunit of the organization. Answer  (B) is incorrect. The company may accept some projects with IRRs less than the cost of capital or reject some project with IRRs greater than the cost of capital. Answer (C) is incorrect. The company may accept some projects with IRRs less than the cost of capital or reject some project with IRRs greater than the cost of capital.

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

33

SU 4: Multiple-Cho Multiple-Choice ice Questions  Questions 

4. Answer (C) is correct. 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 for  both internal and external purposes. Variable costing is not acceptable under GAAP for external reporting purposes.  Answer (A) is incorrect. ABC is appropriate for  external as well as internal purposes. Answer (B) is incorrect. Job-order costing is acceptable for external reporting purposes. purposes. Answer (D) is is incorrect. Process costing is acceptable for external reporting purposes.

5. Answer (D) (D) is correct. 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 is quite low. As debt increases, the cost of capital declines as as long as the cost of debt is less than that of equity. Eventually, the decline in the cost of capital levels off  because the cost of debt ultimately rises as more debt is used. Additional increases in debt (relative to equity) will then increase the cost of of capital. The implication is that some debt is present in the optimal capital structure because the cost of capital initially declines when debt is added. However, a point is reached at which debt becomes excessive and the cost of capital begins to rise.  Answer (A) is incorrect. The composition of the capital structure affects the cost of capital since the components have different costs. Answer (B) is incorrect. The cost of  debt does not remain constant as financial leverage increases. Eventually, that cost also increases. Answer (C) is incorrect. Increased leverage is is initially favorable.

4.8 PRACTICING MULTIPLE-CHOICE MULTIPLE-CHOICE TIME TIME BUDGETING BUDGETING AND CONTROL CONTROL

On the CMA exam, your largest potential po tential problem and your greatest potential advantage is time management. 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 minutes per multiple-choice multiple-choice question. Doing so will 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 on 20-question practice tests. We use 20-question tests because because they are of sufficient length length to work you but are not too long. Based on 35 years of experience, we we are very confident recommending and using 20-question tests. You will have no trouble budgeting your time on the the exam after extensive practice practice with 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 answer  for each question on your first pass. Review Sessions: It is imperative that you review each question you marked and/or answered answered incorrectly after you have completed completed each test. For each question, analyze and understand understand why you answered it incorrectly. This step is an essential learning activity. activity. Review sessions must not be part of  your 30-minute time budget. During the exam, there will be no extra time for review sessions. sessions. You learn more from each question of which you were unsure or answered incorrectly than from questions answered correctly. Why did you answer incorrectly? a. b. c. d.

Misreading Misreading the requirement requirement (stem) (stem) Failing Failing to understand understand what is required required Making Making a math math error  error  Applying Applying the wrong rule or concept concept

e. f. g. h.

Being distracted distracted by one or more more of the answers answers Incorrectl Incorrectly y eliminating eliminating answers answers from consideration Lacking Lacking any knowledge knowledge of the topic tested tested Employing Employing bad intuition intuition when guessing guessing

More important than learning and understanding subject matter is learning how to answer  questions when you are unsure of the correct correct answer. You want to become a good “educated guesser.” Testing before study: Consistent with our “expect the unexpected and deal with it” approach, we recommend you do at least one 20-question test of multiple-choice questions before you study a study unit. This will increase your competence competence and confidence answering difficult questions, questions, i.e., questions on which you are not sure of the answer. Copyright © 2011 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. reserved. Duplication prohibited. www.gleim.com

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

35

STUDY UNIT FIVE ESSAY QUESTIONS (13 pages of outline)

5.1 5.1 5.2 5.2 5.3 5.3 5.4 5.5 5.5

CMA Essa CMA Essay y Ques Questi tion ons  s  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Essa Essay y Inst Instru ruct ctio ions  ns  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Essa Essay y Tact Tactic ics  s  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sample Sample Essay Essay Direct Direction ions s Page  Page  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Samp Sample le Essa Essay y Ques Questi tion ons  s  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35  36  41 43  44 

5.1 CMA ESSAY ESSAY QUESTION QUESTIONS S

Each part of the CMA exam contains two essays. essays. You have at least 1 hour to complete complete both. If  you finished your multiple-choice questions section in less than 3 hours, your remaining time will be carried over to the essay section section and added to the standard 1-hour allocation. See Subunit 5.3 for  more information on essay time budgeting and control. The essay can cover any topic topic within the specific part only, meaning that no Part 2 topics will be tested on Part 1 essays and vice versa. The essay questions are delivered via via computer at Prometric Testing Testing Centers. For essay questions that require a purely written answer, you will have a box in which to type your response. For certain problems that require quantitative responses, you will be able to use a spreadsheet tool to present your  calculations beginning in May of 2011. For complete instructions and the the ICMA’s recommendations regarding 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 immediately receive your grade. The questions will be graded by subject matter experts, and partial credit will be given. For example, if you are asked asked to give three reasons why a selected selected alternative action is good for  a business and you provide pro vide only two correct reasons, you will receive partial credit for these two responses. Likewise, for questions requiring a calculated calculated response, partial credit will be given given for a correct 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 the grader to understand the intent of your response. response. If the response cannot be understood or is contradicted 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, or   justify a selected course of action. While these skills can be tested tested through the use of objective questions, the written-response questions more closely reflect live business situations where a written or oral response would be expected. Preparing for the essay questions questions is complex. To become an expert on answering essays, essays, study Gleim CMA Review  material, consult with your Personal Counselor, and read our advice in this study unit. Be sure to practice as much much as possible by answering all of the the essays in the Gleim books, Gleim Online, and the Essay Wizard. CMA GLEIM ONLINE  and Essay Wizard are interactive reviews that emulate the Prometric testing environment and give you the CONFIDENCE to PASS the essays on the CMA exam!

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

36

SU 5: Essay Questio Questions  ns 

5.2 ESSAY ESSAY INSTRUCT INSTRUCTIONS IONS

The directions below and on the following following pages are similar to those provided by the ICMA. It is very important to become familiar with these instructions so that you can spend more of your time focusing on the content of the exam, exam, rather than on the format. We have added screen shots of  Prometric-emulating essay questions to better prepare you for how the exam will look. 1. Typing Typing your respo response nse

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. start. The mouse pointer will look like a large capital I when you are working in the Answer Box.

2. Using Using the scroll scroll function function

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

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

SU 5: Essay Questio Questions  ns 

37

3. Functions available available from your your keyboard keyboard Backspace - removes text to the left of the cursor  Home - moves the cursor to the beginning of the line End - moves the cursor to the end of the line Arrow cluster - use to move the cursor up, down, or right without removing re moving text Enter - moves the cursor to the beginning of the next line Page Up - moves the cursor up one screen Page Down - moves the cursor down one screen Tab and Delete are NOT available in this program. Bullets, Align Text, and Keyboard Shortcuts are also NOT available. 4. Inserting Inserting text

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

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

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

38

SU 5: Essay Questio Questions  ns 

6. Cutting Cutting and pastin pasting g text

The CUT button cuts (removes) (removes) a highlighted block of text and stores it in the computer’s memory. The COPY button leaves the highlighted text text in place and stores a copy in memory. COPY may be useful if  you aren’t sure yet where you want that text to appear in your answer. answer. The text is stored only until you CUT and COPY again, storing a new block of text. The PASTE button inserts the block of text that you most recently cut or copied at the spot where you placed the cursor. cursor. These are optional features and are 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 COPY the text you want to paste, click on the place where you want the text to appear, and click on the PASTE button.

7. Saving Saving your respon response se

Clicking on SAVE stores what you have typed in response to the current question. It is recommended that you SAVE your answer every 5 minutes. minutes. When you have finished answering the question, question, review your answer and make any final revisions. revisions. Once you are satisfied with your answer, click on SAVE to store this answer. Clicking on “Next” to move move on to the next question will automatically save your  completed response. 8. Using Using the spreadsh spreadsheet eet

 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 certain calculations that can sometimes be more difficult in an essay-based format.

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

SU 5: Essay Questio Questions ns

39

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 the text 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 Reviewing items items

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

Click on the Review Review All button. button. You will be moved moved to the first question question.. Clicking Clicking on the Next button will cause you to move to the next question. You can also double-click on the question question number in the list to move to a particular question. b. To review review marked marked questions questions

Click on the Review Review Marked button. button. You will be moved moved to the first marked marked question. question. Clicking on the 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 the Scenario Scenario and Question. Question. In the course, you will be able to move this pop-up box to access those tools. tools. Copyright © 2011 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. reserved. Duplication prohibited. www.gleim.com

40

SU 5: Essay Questio Questions  ns 

c. To review review incomplete incomplete questions questions

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

10. Using Using exhibit exhibit buttons buttons

During the examination, you will see a series of buttons at the bottom bottom of your screen. The buttons link to a calculator and tables to assist you. When you click one of the buttons, buttons, a pop-up window will appear displaying the exhibit. When you are finished viewing the exhibit, you may click on the Close Window button located at the lower-left-hand of  the exhibit window. If you need to resize the window, window, you can do so by moving the the mouse pointer over  the edge of the window. When it changes to an arrow pointing two ways, you may hold down the left mouse button and then drag the mouse to to resize the window. Keep in mind that the images will not change size along with the window.

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

SU 5: Essay Questio Questions  ns 

41

5.3 ESSAY ESSAY TACTICS TACTICS

The Gleim essay questions in Gleim Online and Essay Wizard allow you to prepare for the essay section of your exam under true exam exam conditions. Each study unit in Gleim Online includes one essay scenario with 1-4 questions each. Each study unit in Essay Wizard Wizard contains two additional scenarios.  After you grade each essay question, you should review the concepts that you marked and/or did not answer correctly. The objective is to determine why why you missed each question in order to to avoid making similar mistakes on the CMA exam. Exam Tactics

The following tactical suggestions are to assist you in maximizing your score on the essay section of the CMA exam. Remember, knowing how to take the exam and how to answer individual questions is as important as studying the subject matter tested on the exam. 1.

Budget your time.

a. b.

c.

We make make this this point point with with emphas emphasis. is. Just as you you would would fill fill up your gas tank tank prior prior to to reaching empty, so too should you finish your exam before time expires. You have at least least 1 hour to to answer answer multiple multiple questions questions based on on two essay essay scenario scenarios. s. If you finished your multiple-choice section in less than the allocated 3 hours, your  remaining time will be carried over to the essay section and added to the 1-hour  allocation. If you you begin the essays essays with with 1 hour on the Time Time Remaining Clock, you should allocate 30 minutes to each essay scenario, scenario, no matter how many questions questions it has. Each scenario may have one, two, three, or four questions, but the ICMA has designed all scenarios to require approximately 30 minutes each and to count for the same number of points, regardless of the the number of questions they contain. For the scenarios that contain more than one question, divide 30 minutes equally among the questions (see below). Example (assuming 1 hour on Time Remaining Clock): 1 scenar scenario io with with 1 questi question on = 30 minute minutes s +1 scenario scenario with with 3 questions questions = 30 minutes minutes (10 minutes minutes per per question) question) 2 scenar scenarios ios,, 4 questi questions ons = 60 minute minutes s (1 hour) hour)

d.

If you you begin your essay essay section section with more than 1 hour remaining, simply simply divide the time 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 scenar scenario io with with 1 questi question on = 37 minute minutes s +1 scenario scenario with with 3 question questions s = 37 minutes minutes (12 minutes minutes per per question) question) 2 scenar scenarios ios,, 4 questi questions ons = 75 minute minutes s (1 hour, hour, 15 minute minutes) s)

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

42

SU 5: Essay Questio Questions  ns 

e.

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

f.

Questions

Time

Start

Finish

Comments

Number the scenarios far enough apart to to leave plenty of space for your notes. One of Prometric’s introductory screens will show each scenario with the number of  questions and suggested time. Use this information to fill out the first three columns in the Gleim Time Control Sheet (GTCS). On your your Prometr Prometric ic compute computerr screen, screen, the time time remaini remaining ng (starti (starting ng with with at least 1 hour) hour) appears at the top right corner of your your screen. Enter 60 (or more) on your GTCS.

Note that the image above is an example only. The number of questions per scenario will vary, as well as how much total time you have to spend (based on when you completed your multiple-choice section). It is important to use use a sheet of scratch paper as your GTCS to help you manage your time at the exam. 2.

For each scenario, note the suggested time allocation (i.e., half your total time) and number of questions on your GTCS.

a. b. c.

d. e. 3.

1) Focusing on what what is required enables you to ignore extraneous extraneous information. information. Allocate your time spent per question associated with each scenario by dividing your  your  total time for that scenario equally among a mong questions. On a separate separate sheet of scratch scratch paper, outline outline the grading grading concepts concepts for for each of the requirements. Plan on using one sheet for each scenario. Thus, you will need two additional sheets of scratch paper. Type your answers answers to one one question question at a time. time. Proofr Proofread ead and edit. edit.

Answer questions in sequential order.

a. b. 4.

Read requirements for each question carefully.

Do not agonize over any one question or scenario. Stay within your time budget. As time time permits permits,, you you can return to question questions s previous previously ly complet completed. ed.

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

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

SU 5: Essay Questio Questions  ns 

43

5.4 SAMPLE SAMPLE ESSAY ESSAY DIREC DIRECTION TIONS S PAGE PAGE

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

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

44

SU 5: Essay Questio Questions  ns 

5.5 SAMPLE SAMPLE ESSAY ESSAY QUESTION QUESTIONS S

The Gleim essay questions in the CMA Review  books, Gleim Online, and Essay Wizard allow you to prepare for the essay section section of the CMA exam under true exam conditions. Here are two examples of essay scenarios that might appear on the CMA exam. Note that a scenario is presented presented first, followed by a question or questions based on the information given in the scenario. scenario. Remember, essay questions are used on the exam to reflect a more “real-world” environment in which candidates must apply the knowledge that they have have learned. The answers to these essay essay questions are provided at the end of this study unit. Remember, you would allocate half of your total time on each scenario, scenario, even though 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 outlets throughout the world, and the pace of multinationalism has accelerated in recent recent years. By the early 1970s, 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 fluctuated between about $50 billion and about $330 billion. Investment abroad by U.S. companies ranged from about $120 billion to about $255 billion. A few U.S. corporations have have more than half of their assets in foreign countries. In aggregate terms, roughly 400 multinational enterprises produce perhaps as much as one-third of the free world’s industrial output. Multinational corporations have wholly-owned foreign subsidiaries, partially-owned foreign joint ventures, and/or patent and trademark licensing agreements abroad. Some of the more sophisticated corporations corporations have foreign research and development activities activities and multinational management organizations. Questions

1.

Describe Describe the reasons reasons why why firms decide to become become multina multinational tional..

2.

Identify and describe both the advantages and disadvantages of multinational corporations from the point of view of the a. b.

Home Home coun countr try y Host Host coun countr try y

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

45

SU 5: Essay Questio Questions  ns 

Scenario for Essay Questions 3, 4, and 5

RealTalk, Inc. manufactures manufactures specialized video-conferencing equipment. Production of specialized units is generally performed under contract, while standard units are produced in accordance with marketing projections. Maintenance of customer equipment is an essential service provided and accounts for a significant portion of revenue. Recent economic conditions have caused a decline in RealTalk’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 Revenue from maintenance contracts Total sales Cost of goods sold Customer maintenance expense Selling expense Administrative expense Interest expense Total expenses Income before income taxes Income taxes Net income

$6,000 1,800 $7,800 4,600 1,000 600 900 150 $7,250 550 220 $ 330

RealTalk’s return on sales before interest and taxes was 9% for the year just ended, end ed, while the industry average was 12%. The company’s total asset turnover was 3 times, and its return on average assets before interest and taxes was 27%, both well below industry industry averages. To improve performance and raise these ratios nearer to, or above, industry averages, the president of RealTalk has established the following goals for the coming year: year: (1) 11% return on sales before interest and taxes, (2) 4 times total 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 growing international 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 $1 30,000 to improve customer service and response time. The increased inventory will be financed financed at an annual interest rate of 12%; 12%; no other borrowings or loan reductions are contemplated contemplated during the coming year. All other  assets will be held to the same levels as the year ended. Increase selling expenses by $250,000 but hold administrative expenses to the same level as 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 forma income statement for RealTalk, RealTalk, Inc. Inc. for the fiscal fiscal year ending June 30, 2009, on the assumption that the proposed actions are implemented as planned and that the increased sales objectives will will be met. (Assume a 40% effective tax rate, and round all numbers to the nearest thousand, i.e., $000 omitted.)

4.

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

5.

Discuss Discuss the the limitatio limitations ns and difficulti difficulties es that that can be encountere encountered d in using using ratio ratio analysis analysis,, particularly when making comparisons to industry averages.

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

46

SU 5: Essay Questio Questions  ns 

Essay Questions 1 and 2 -- Unofficial Answers

1.

2.

Most firms become multination multinational al to to expand expand markets markets and and improve improve profit profit potential potential.. Many multinational firms began with efforts to secure national resources that were not available in the home country. These firms were seeking long-term security rather than cost savings. Expansion into foreign markets often occurs where firms have a monopolistic advantage over the foreign competition. This advantage is associated with with advanced technology, strong product differentiation, or economies of scale, and is frequently protected by proprietary knowledge or trademarks. Without these special advantages, the foreigner  would 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 purchasing policies, firms frequently have difficulty increasing market share in foreign countries. Rather than contend with these barriers, firms establish production facilities and distribution centers in the foreign countries, thereby overcoming economic disadvantages. To improve their competitive position, many firms establish foreign facilities to take advantage of less expensive resources. a.

The advantages advantages of multination multinational al corporation corporations s from the point of view of the country country include the following: Direct foreign investment investment often has a favorable balance of  payments effect from profits, dividends, and patent royalties. royalties. While there may be an initial transfer of capital abroad, this capital does not always come from the home country. In addition, many multinationals export components components for assembly abroad, and these exports help the home country’s country’s balance of payments. payments. Multinationals promote international trade, contribute to the effectiveness of international monetary arrangements, and help maintain maintain liberal trade policies. The profits and knowledge knowledge gained from foreign operations may be used to expand or improve home industries. The disadvantages of multinational corporations from the point of view of the home country include the following: Because the foreign investment of some some multinationals replaces exports from the home country, there is a negative effect on the balance of  payments. When factories are built abroad, jobs are exported, and corporations have the option of moving additional operations out of the country. Multinationalism may give a corporation certain advantages in its home market that purely domestic rivals cannot match. The advantages include vertical integration, the spreading of joint costs over many markets, and the use of foreign profits to boost the home market position. Multinationals may be subject to to the risk of foreign expropriation of assets.

b.

The advantages of multinational multinational corporations from the the point of view of the host country include: Multinationals can promote economic development and prosperity in the host country. The infusion of capital can mobilize host country resources, boosting boosting output and efficiency. Expanding exports improve the host country’s balance of  payments. The introduction of new technology by multinationals saves lessdeveloped countries the costs of developing technology and adds to the country’s productive capabilities. Local employment usually increases and results in an improved standard of living. Multinationals provide training for skilled workers and managers. The disadvantages of multinational corporations from the point of view of the host country include the following: Multinationals may contribute to a net capital outflow in the host country as profits are repatriated and royalties are paid. Capital outflow problems can be aggravated by arbitrary transfer prices among multinational subsidiaries. This is done to move profits profits to those countries where taxes taxes are low or  to evade laws restricting repatriation of profits. Multinationals may cause inappropriate technology to be introduced. Most advanced technology technology is capitalintensive and labor-saving, and may not be in the best interests of less-developed countries where labor is abundant.

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

47

SU 5: Essay Questio Questions  ns 

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) Maintenance contracts ($1,800 × 1.06) Total sales

4.

$6,996 1,908 $8,904

Cost of goods sold ($4,600 × 1.03 × 1.06) Cust Custom omer er main mainte tena nanc nce e expe expens nse e ($1, ($1,00 000 0 + $130 $130)) Selling expense ($600 + 250) Administrative expense Interest expense [$150 + ($250 × .12)] Total expenses

5,022 1,13 1,130 0 850 180 $8,082

Income before taxes Income taxes ($822 × .4) Net income

822 329 $ 493

900

Return on sales before before interest interest and taxes = EBIT ÷ Sales 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 comparability difficult. Special circumstances not encountered encountered by the industry may be the cause of  deviation from the industry. A blend of techniques should be used with ratio analysis when making comparisons to the industry.

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

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

49

STUDY UNIT SIX PREPARING TO PASS THE CMA EXAM (8 pages of outline)

6.1 6.1 6.2 6.3 6.3 6.4 6.5 6.5 6.6 6.7 6.7 6.8 6.8 6.9 6.10 6.11 6.11 6.12 6.1 2 6.13 6.1 3 6.14 6.1 4 6.15 6.1 5

Contro Cont rol: l: How How To Be In  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Applyi Applying ng for for the Exam: Exam: How Many Many Part Parts s to to Take Take and When When to to Appl Apply  y  . . . . . . . . . . . . . . . . . How Ho w Good Good Is Good Good Enou Enough gh?  ?  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notecards  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Self Self Stud Study y vs. vs. Grou Group p Stud Study  y  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time Time Alloc Allocati ation on and Study Study Plan  Plan  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . When hen to Study  udy  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Where here to Study  tudy  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Order Order of Study Studying ing Parts Parts and Study Study Units  Units  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How to Study Study a Study Study Unit Unit Using Using the Gleim Gleim Review Review S System  ystem  . . . . . . . . . . . . . . . . . . . . . . . . CMA CM A Glei Gleim m Onli Online  ne  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gleim Gleim Essay Essay Wizar Wizard  d  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gleim Gleim Books Books and and Test Test Prep Prep Softw Software  are  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gleim Gleim Audio Audio Review  Review  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CMA Examin Examinati ation on Che Checkl cklist  ist  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49  50  51 51 51 52  52  53  53  53  54  54  55  56  56 

Preparing to sit for the CMA CMA exam requires planning and control, i.e., a control system. This study unit suggests study and preparation procedures to maximize your test scores. 6.1 6.1

CONT CONTRO ROL: L: HOW HOW TO TO BE BE IN IN

You have to be in control to be successful successful during exam preparation and execution. execution. Control is a process that we use in all our activities, activities, implicitly or explicitly. explicitly. The objective is to improve performance as well as be confident that the the best possible performance is being generated. Control is a process whereby you 1. 2. 3. 4. 5. 6. 7.

Develop Develop expectation expectations, s, standards, standards, budgets, budgets, and plans. Undertake Undertake activity, activity, production, production, study, study, and learning. learning. Measure Measure the activity, activity, production, production, output, output, and knowledge. knowledge. Compare Compare actual actual activity activity with expected expected and budgeted budgeted activ activity. ity. Modify Modify the activ activity, ity, behavior, behavior, or study to better better achieve achieve the desired desired outcom outcome. e. Revise Revise expecta expectations tions and standards standards in light light of actual experience. experience. Continue Continue the process process or or restar restartt the the proces process s in in the the future. future.

Most accountants study this control process in relation to standard costs, i.e., establish cost standards and compute cost variances. variances. Just as it helps them in their jobs, the control process will help you pass the CMA exam. Every day, you rely on control control systems implicitly. For example, when you groom your hair, you have expectations about the desired appearance of your hair and the time required to style style it. You monitor 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. 2. 3. 4. 5.

Prepar Preparing ing to take take the CMA exam. exam. Studying Studying an individual individual Gleim study unit. Answering Answering individual individual multiple-c multiple-choice hoice questions. questions. Answering Answering individual individual essay questions. questions. Taking Taking each each of the two parts of the CMA exam.

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

50

SU 6: Preparing Preparing to Pass Pass the CMA Exam

Unless Unless you are a natural natural at something, something, most endeavors endeavors will improve with explicit explicit control. This is particularly true with the CMA exam. 1.

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

2.

Practice Practice your your question-a question-answer nswering ing techniques techniques (and develop develop control) control) as you prepare prepare solutio solutions ns to practice questions/problems during your study program.

3.

Plan to to use the the Gleim Gleim Time Time Managemen Managementt System System (explai (explained ned in Study Study Unit Unit 7, Subunit Subunit 15) at the 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 situations where you were not in control. control. Notice Notice the similarity similarity of being prepared prepared and being in control. When you are prepared, prepared, you know what to expect and what what to do! Preparation Preparation is the key to success success on the CMA exam: exam: knowing knowing what to expect expect and what to do to pass the exam! Control is exactly exactly what exam! Control CMA Review: Review: A System System for Success Success and the other components of the Gleim Knowledge Transfer  System™ System™ give you. As you study Study Units Units 1 through through 7 in this booklet, relate relate what you are studying to the five steps on page i. You can and will be successful successful on the CMA examination examination.. 6.2 APPLYIN APPLYING G FOR THE THE EXAM: EXAM: HOW MANY MANY PARTS PARTS TO TAKE TAKE AND WHEN WHEN TO APPLY APPLY Our most successful successful candidates candidates take take one part of the exam at a time. Once a candidate candidate takes one part, (s)he should immediately begin studying for the next part with the goal of taking it during the next available available testing testing window. There is a savings on exam registration registration fees if a candidate candidate can take both parts in one window – one at the beginning beginning and one at the end. For example, example, if you register register on December 15, 2011, you will be eligible to schedule your exam in the January/February 2012 testing window. window. You can take Part 1 in early January January and still have plenty of time to adequately prepare prepare to take Part 2 by the end of February. Before registering for and scheduling your exams, contact the Gleim Personal Counselors for a recommended recommended study schedule schedule to assist with your exam goals (see (see Subunit 6.6). For a list of the Gleim study units in each part, see the Preface. Preface. See Study Unit 2 for the ICMA Content Specificati Specification on Outlines for each part. CMA Part 1: Financial Financial Planning, Planning, Performan Performance, ce, and Control Control CMA Part Part 2: Financial Financial Decisio Decision n Making 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 exam within 3 years.  After  After studying studying Study Unit 1 of this booklet booklet and understandin understanding g the requirements requirements and procedures for  applying, applying, decide when you will take the exam. Be sure to complete complete your registration registration application application correctly. correctly. If information information is incorrect or missing, the application application will be returned returned and you may not have time to resubmit resubmit it. Also, Also, be very careful careful to specify which part(s) part(s) you are taking. Both Parts 1 and 2 are offered offered in three testing testing windows: January/Fe January/February bruary,, May/June, May/June, and September/ September/Octob October. er. Register Register at least 6 weeks before before the time you wish to take the exam. Registration Registration for Parts 1 and 2 received on or after February 16, June 16, or October 16 will be authorized for any future testing testing window (i.e., (i.e., not the current window, window, but the next window or later). later). For example, example, if you register for a part on February 16, 2012, the earliest you can take the exam is May 1, 2012. Registration Registrations s received received before before those dates will be authorized for any window, including the current current one. See the table below. If you register during

The earliest you can take your exam is

October October 16-February 16-February 15 January/Fe January/February bruary Febr Februa uary ry 16-J 16-Jun une e 15

May/ May/Ju June ne

June June 16-O 16-Oct ctob ober er 15

Sept Septem embe ber/ r/Oc Octo tobe ber  r 

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

51

SU 6: Preparing Preparing to Pass Pass the CMA Exam

When you register for an exam part, you will be sent authorization to take the exam in a testing window based on the date on which you registered (see Study Unit 1, Subunit 12). 6.3 HOW GOOD IS GOOD GOOD ENOUGH? ENOUGH?  An issue facing facing all CMA candidates is how well they need to perform to pass the CMA exam. We recommend that you develop your proficiency so that you are scoring a minimum of 75% on each study unit’s multiple-c multiple-choice hoice questions. questions. You may wish to establish establish a personal personal goal somewhat higher or lower, depending depending on your background and knowledge knowledge of the topic. topic. Your personal personal standards standards may also vary by exam part. Identify Identify your goals and stay on track track until they are achieved. achieved. When you take the exam, exam, do your best on every question question within the time budgeted. Remember Remember that a relatively relatively small percentage percentage of  candidates candidates pass each each part. Thus, it is imperative imperative that you you do your best on each part of the exam and every question in each part. 6.4 NOTEC NOTECARD ARDS S Some concepts, concepts, definitions definitions,, and lists require require memorization memorization for the CMA exam. If you decide to use notecards, 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 explanations,, summary, etc. etc. In the back of each CMA book is a Content Specification Outline, which represents what will be covered covered on the exam. Use this list list as a guideline guideline for creating creating your notecards. notecards. A good method method to use is to write one concept that needs to be memorized memorized per subunit. Some subunits subunits may have more than one concept concept that you need to memorize, memorize, while others others contain concepts concepts that you already know. know. Use your   judgment 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 improve recall of the information information on your notecards. notecards. This method method is based on the observation observation that when you are struggling struggling for an answer, answer, you tend to glance up. If you held up your cards as you studied, studied, that glance will trigger recall of what was on the card.  Also,  Also, you may wish to do a summary notecard notecard of each of the steps to exam success. success. Write a summary summary in your own words so you understand understand the core concepts. concepts. You may also wish wish to do a few notecards for each Gleim study unit that you complete. 6.5 SELF SELF STUDY STUDY VS. VS. GROUP GROUP STUDY STUDY Candidates are exposed to a wide variety of CMA review books, study aids, and review courses to assist assist them in preparing for the CMA exam. exam. This CMA Review: Review: A System for for Success Success is a good start and should be followed with the Gleim CMA Review System. System. CMA review assistanc assistance e can be divided into self study and group study. study. Group study is assembling assembling with others to obtain the benefit of an instructor or other teaching technology and/or interaction with other CMA candidates. candidates. Self study can be based on textual materials, materials, computer computer CD-ROM, audio and/or  video reviews and, as in the Gleim system, frequent use of a combination of these materials. Self Study Books Other textual material  Audio reviews Videotapes Computer software Online courses

Group Study Live instruction  Audio instruction Videotape instruction

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

52

SU 6: Preparing Preparing to Pass the CMA CMA Exam 

The ideal situation that we recommend recommend is group study with Gleim Professor-Led Live Review. This program provides personalized and individual attention with with a group dynamic. On the other hand, if you are considering group study in which you listen to audio lectures or watch videotapes at a hotel or other  public place, consider instead spending $739.95 for the Gleim CMA Review System  and studying in the convenience and comfort of your own home. Most firms who reimburse course course expenses will pay for  Gleim review materials instead of or possibly in addition to a group study course. Save commuting inconvenience, costs, and time. Learning is an individual activity. If you have the necessary self-discipline, you can learn a lot on your own. Reflect on how much you have already learned about the CMA exam by studying this booklet. You are becoming an expert on the nature and subject matter of the CMA exam. You will be in control of the subject matter matter tested and the examination process when you take the CMA exam. exam. It will be fun because you will be proud of doing your best while preparing for and taking the CMA exam. 6.6 TIME ALLOCATI ALLOCATION ON AND AND STUDY STUDY PLAN PLAN

The Gleim CMA Review  program consists of 10 study units for each e ach exam part, or a total of  20 study units for both parts of the exam. Complete one study unit at a time. time. If you spend about 5 hours per study unit, you will invest about 50 hours per exam part. Add 8 hours (broken up because you 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 customized tests on problem areas as a cumulative review. Different people will be able to study study for different amounts of time per week. For example, if you are able to dedicate yourself to studying for 15 hours a week, you will complete all 10 study units in one part, plus a cumulative review of your weak areas, in 5 weeks. weeks. Your completion rate will depend on your personal circumstances (e.g., how familiar you are with the material, your level of education, edu cation, elapsed time since your degree was earned, how much time you have available to study, how long you can concentrate in one sitting, etc.). etc.). Speak to a Gleim Personal Counselor to to obtain help in preparing a study schedule that is right for for you! Call (800) 874-5346 or email [email protected]. [email protected]. Each week, you should evaluate your progress and review your preparation plans for the time remaining prior to the exam. Use a calendar to note the exam dates and the weeks to go before before the exam. Marking a calendar will facilitate your planning. Review your commitments, e.g., out-of-town assignments, personal responsibilities, etc., and note them on your calendar to assist you in keeping to your schedule. 6.7 WHEN WHEN TO STUDY STUDY

 At what times of the the day are you the most productive? productive? Do you need a specified study schedule? How disciplined are you? How are you going to control your study study process? Many people are most productive early in the morning when they are rested. Many candidates find 4-6 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 in less time and retain more. The mind is clearer after sleep and able to internalize information in a way that is more accessible for recall. You should study when you study best. Unfortunately, other activities activities compete for for your time. Lack of time is your enemy, and preparing for the CMA exam takes a considerable amount of quality study time. This effort requires a substantial personal commitment.

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

SU 6: Preparing Preparing to Pass the CMA CMA Exam 

53

Determine what time-consuming activities you can temporarily give up or defer until after the CMA exam. Something has to give if your schedule schedule is already full before you begin your study study process. Recall that there are 168 hours in a week (7 × 24), of which you you work and commute 50 to 60 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 based on your circumstances. Set up a regular schedule with the objective of completing a certain amount of work (based on your  study schedule) at one sitting. This will give you a feeling of accomplishment. Plan exactly what what you will accomplish before you begin, and be proud of yourself when you achieve your study goals! 6.8 WHERE WHERE TO STUDY STUDY

Study wherever you can concentrate. concentrate. The Gleim CMA Review System  is extensive because it is complete. However, it is presented in two separate books, with Test Test Prep Software, Test Prep for  Windows Mobile, Gleim Online, Essay Wizard, and Audio CDs for your convenience. 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 have h ave a table or desk. Try to find study areas that are quiet, well lit, and free free of distractions. 6.9 ORDER ORDER OF STUDYING STUDYING PARTS PARTS AND AND STUDY STUDY UNITS

Once you have determined which part you will study first, complete study unit after study unit in sequential order. Remember that you will never be completely completely prepared AND you may have to go on to the next study unit with with a 75% (or less) correct response response rate on multiple-choice questions. Stay on schedule and focus on a reasonable and attainable attainable objective: PASSING! Which part should you study first first and second? Whatever you feel good about works fine. fine. If you want 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 to set up a plan and IMPLEMENT your plan. If you purchase the Gleim CMA Review System , you can also speak with your Personal Counselor about the order that is best for you. 6.10 HOW TO STUDY STUDY A STUDY UNIT UNIT USING USING THE GLEIM GLEIM REVIEW REVIEW SYSTEM SYSTEM

To ensure that you are using your time effectively, we recommend that you follow the steps listed below 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, minutes, plus 10 10 minutes minutes for for review) review) In In the Gleim Gleim Online Online course course,, complete complete Multipl MultipleeChoice Quiz #1 in 30 minutes (excluding the review session). It is expected that your  scores will be low on the first quiz. a.

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

2.

(30 minutes minutes)) Use Use the audiovisual audiovisual presentatio presentation n for an overview overview of the the study study unit. unit. The Gleim Gleim CMA Review Audio CDs  can be substituted for audiovisual presentations and can be used while driving to work, exercising, etc.

3.

(45 minutes minutes)) Complete Complete the 30-ques 30-question tion True/False True/False quiz. It is interactiv interactive e and most effective effective if  used prior to studying the Knowledge Transfer Outline.

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

54

SU 6: Preparing Preparing to Pass the CMA CMA Exam 

4.

(60 minutes) minutes) Study the Knowledg Knowledge e Transfer Transfer Outline Outline,, particula particularly rly the the troublesom troublesome e areas identified from the multiple-choice questions in the Gleim Online course. The Knowledge Transfer Outlines can be studied either online or from the books.

5.

(30 minutes, minutes, plus 10 10 minutes minutes for for review) review) Complet Complete e Multiple-C Multiple-Choice hoice Quiz #2 in the the Gleim Gleim Online course. a.

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

6.

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

7.

(30 minutes) minutes) Complete Complete the essay scenario scenario in Gleim Gleim Online. Online.

8.

(60 minutes minutes)) Practic Practice e the additional additional essay scenarios scenarios in in the Essay Wizard. Wizard.

When following these steps, you will complete 10 units in about 60 hours. Then spend about 10-20 hours using the CMA Test Prep  Software or Test Prep for Windows Mobile to create customized tests for the problem areas that you identified. To review the entire part before the exam, use the CMA Test Prep  Software or Test Prep for Windows Mobile to create 20-question quizzes that draw questions from all the study units. units. Continue taking 20-question quizzes until you you approach your desired proficiency 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 unit will be about 5 hours. Each study unit in the course course contains an audiovisual presentation, 30 true/false true/false study questions, 10-20 pages of Knowledge Transfer Outlines, two 20-question multiple-choice quizzes, and an essay scenario. CMA Gleim Online  provides you with a Personal Counselor who will provide support to ensure your 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 6.1 2 GLEIM GLEIM ESSAY ESSAY WIZARD WIZARD

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

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

SU 6: Preparing Preparing to Pass the CMA CMA Exam 

55

6.13 GLEIM GLEIM BOOKS BOOKS AND TEST TEST PREP SOFTW SOFTWARE* ARE*

Twenty-question tests in the CMA Test Prep  Software or Test Prep for Windows Mobile will help you to focus on your weaker areas. Make it a game: game: How much can you improve? Our CMA Test Prep  Software forces you to commit to your answer a nswer choice before looking at answer explanations; thus, you you are preparing under true exam conditions. It also keeps track of your  time 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 NOT omit the step in which you diagnose the reasons for answering questions que stions incorrectly; i.e., learn from your mistakes while studying so you avoid making similar mistakes on the CMA exam. 1.

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

2.

Study the Knowledg Knowledge e Transfer Transfer Outline Outline for for the correspondin corresponding g study study unit in your Gleim book. Place special emphasis on the weaker areas that you identified with the initial diagnostic quiz in Step 1.

3.

Take two two or three 20-ques 20-question tion tests tests in test test mode after you have have studied studied the the Knowledge Knowledge Transfer Outline.

4.

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

5.

Continue this process until you approach a predetermined proficiency level, e.g., 75%+.

6.

Modify Modify this this process process to to suit suit your individual individual learning learning proces process. s. a.

b.

Learning Learning from from question questions s you answer answer incorrect incorrectly ly is very important. important. Each questi question on you you answer incorrectly is an opportunity to avoid missing actual test questions on your  CMA exam. Thus, you should carefully study study the answer explanations provided until you understand why the original answer you chose is wrong, as well as why the correct answer indicated is correct. correct. This study technique is clearly clearly the difference between passing and failing for many CMA candidates. Also Also,, you you must determine why you answered questions incorrectly and learn how to avoid the same error in the future. Reasons for missing missing questions include: 1) 2) 3) 4) 5) 6) 7) 8)

c.

d.

Misreading Misreading the requirement requirement (stem) (stem) Not understandin understanding g what is required required Making Making a math math error  error  Applying Applying the wrong rule or concept concept Being distracted distracted by one one or more of the the answers answers Incorrectl Incorrectly y eliminat eliminating ing answers answers from from considerati consideration on Not having having any knowledge knowledge of the the topic topic tested tested Employing Employing bad intuition intuition when guessing guessing

It is also important important to verify that you you answered correctly for the the right reasons. Otherwise, if the material is tested on the CMA exam in a different manner, you may not answer it correctly. It is imperative that you complete your your predetermined number of study units units per week so you can review your progress and realize how attainable a comprehensive CMA review program is when using Gleim CMA Review System . Remember Remember to meet or  or  beat your schedule to give yourself confidence.

*Note: Gleim does not recommend recommend studying for the CMA CMA exam using only book and and Test Prep. Candidates need to practice essays in an exam environment, which means on a computer. Copyright © 2011 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. reserved. Duplication prohibited. www.gleim.com

56

SU 6: Preparing Preparing to Pass the CMA CMA Exam 

6.14 GLEIM GLEIM AUDI AUDIO O REVIEW 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. The purpose is to get candidates “started” so they can relate to the questions they will answer before reading 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 get you through the CMA exam with minimum time, cost, and frustration. You can listen to two short sample audio reviews on our website at www.gleim.com/accounting/demos/. www.gleim.com/accounting/demos/. 6.15 CMA E EXAMI XAMINATI NATION ON CHECK CHECKLIST LIST

1.

Become Become knowledgeab knowledgeable le about about the exam, and determin determine e which which part of the the exam you will will take take first.

2.

Purc Purcha hase se the the Glei Gleim m CMA Review System  (including books, Test Prep Software, Test Prep for Windows Mobile, Audio CDs, Gleim Online with your Personal Counselor, and Essay Wizard) to thoroughly prepare for the CMA exam.

3.

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

4.

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

5.

Upon receipt receipt of authoriza authorization tion to to take take the exam, exam, contact contact Prometric Prometric to schedule schedule your test. test.

6.

Work systemati systematically cally through through each each study unit in the the Gleim Gleim CMA Review System .

7.

Sit for and PASS PASS the the CMA CMA exam exam while you are in in control. control. Gleim Guarantees Guarantees Success! Success!

8.

Enjoy your career career and recommend recommend Gleim to others others who are also also taking these exams. exams. Stay up-to-date on your Continuing Professional Education Requirements with Gleim CPE.

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

57

STUDY UNIT SEVEN HOW TO TAKE THE CMA EXAM (8 pages of outline)

7.1 7.1 7.2 7.2 7.3 7.3 7.4 7.5 7.5 7.6 7.6 7.7 7.7 7.8 7.8 7.9 7.10 7.10 7.11 7.12 7.1 2 7.13 7.1 3 7.14 7.1 4 7.15 7.15

A Posi Positi tive ve Me Ment ntal al Atti Attitu tude  de  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exam Exam Site Site Loca Locati tion  on  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stay Stayin ing g in a Ho Hote tel l  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What to Wear  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eati Eating ng and and Phys Physic ical al Co Comf mfor ort  t  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What hat to Take Take to the the Exam  Exam  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taki Taking ng the the CM CMA A Exam  Exam  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prom Promet etri ric c Test Test Ce Cent nter er Ru Rule les  s  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Promet Prometric ric Test Test Cen Center ter Reg Regula ulati tions  ons  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Calc Ca lcul ulat ator ors  s  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CMA Candidate Candidate Misconduct Misconduct and Cheating  Cheating  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Checki Che cking ng in at the Exam Exam Site  Site  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beginn Beginning ing Your Your Exam  Exam  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comput Com puter er Prob Problem lems s at the Exam Exam Site  Site  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time Time Ma Mana nage geme ment  nt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57  58  58  58  58  59  59  59  60  60  61 63  63  63  64 

 As you take each part of the CMA exam, you will be in control as a result of your preparation process. This study unit addresses what to expect and how you should should plan to conduct yourself during the exam. Convince yourself that exam focus, focus, examination strategies, and a control system for taking taking each part of the CMA exam will assure that you maximize your exam e xam scores. The purpose of this study unit is to focus on what to to expect and how to react. You have to be better  than most of your peers taking the exam because the pass rate on the CMA exam historically has been relatively low. To the extent you know more more about the exam process, you you will have more confidence and control and will perform better. Re-examination candidates: You have already experienced the exam process but were not successful. successful. Please study this study study unit carefully to help you refine your  your  exam execution! This study unit includes a general explanation of examination site instructions, rules, and procedures. You have to be prepared as to what to expect so you are not distracted distracted from your mission of passing the exam ! 7.1 A POSITI POSITIVE VE MENTA MENTAL L ATTITUD ATTITUDE E

Being in control is fun, and you are in control with the Gleim CMA Review . Enjoy your competitive advantage, which is based upon a systematic, thorough review of all material tested on the CMA exam. It is not hit or miss. The Gleim method does not involve guessing guessing about what will will appear on the next CMA exam. You will be prepared for any and all questions. If a question appears difficult to you, 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 skills by planning your preparation program for the CMA exam and then adjusting those plans as part of your  control process. You will do the same thing when you you take the exam: exam: YOUR BEST. Again, no one can ask for  more.

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

58

SU 7: How to Take Take the CMA CMA Exam 

7.2 EXAM EXAM SITE LOCATION LOCATION

Prometric exam sites vary in how they are operated. For example, some professionals have have learned that the Gainesville, Florida, Prometric site is well run, organized, quiet, etc., and drive 250 miles to Gainesville to take their examinations.  Also make sure you know where where the exam site is and how to to get there. Some Prometric centers are 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 to use. Ask him/her for information about the site and for any suggestions (s)he might have. Seek answers to any questions that come to mind while you read this study unit and/or and/or prepare for the exam. The objective is to know as well as possible what to expect. Remember, always expect the unexpected and be prepared to deal with it. 7.3 STAYING STAYING IN A H HOTE OTEL L

If it is not convenient to drive to the exam site from home on test day, consider reserving a hotel room near the exam site. The objective is to avoid distractions distractions and provide complete control over your  sleep and study schedule. Make sure the hotel suits you and you will feel good about staying there. Look at the rooms. rooms. Do they have a desk or table table for study? Are the beds, pillows, pillows, etc., comfortable? comfortable?  Are restaurants, room service, exercise exercise opportunities, and swimming pools available? Is late checkout available? Is the hotel near a noisy road or intersection? Schedule your meals, beverages, and exercise to maximize your rest . After months of review and study, the best method method to obtain maximum points is a great night of sleep. Use both an alarm clock and a wake-up call to ensure that you get up on time. You may want to take your your own alarm clock. Provide adequate time to bathe, dress, eat, check out of the hotel, and get to the exam site. Do not get up too early to try to cram because you may become frustrated. You want to wake up feeling good and being in control so you will stay in control all day! 7.4 7.4 WHAT WHAT TO WEAR WEAR

Wear comfortable clothes. Sweats, shorts, and jeans are very appropriate. Wear several layers so you can add or remove shirts shirts and sweaters. (Should you remove any outerwear, you will will be asked to place the clothing in one of the storage lockers at the test center; remember to take it with you when you leave.) Generally, wear what you wear when you you are most comfortable studying. studying. Remember that coats, umbrellas, books, purses, and attache cases are not allowed in the testing room and an d are only accommodated at the exam site through the use of a small locker. Thus, you should not take something that you do not want want to lose. Have an umbrella, raincoat, or other special special clothing available in your nearby hotel or car, as appropriate. 7.5 EATING EATING AND AND PHYSIC PHYSICAL AL COMFOR COMFORT T

Your physical comfort during the exam can be affected by what you choose to eat prior to the exam. The proper foods can give you the energy to get through the exam with a clear head. Consider  the following: 1.

Choose foods with complex complex carbohydrat carbohydrates es (such (such as breads, breads, rice, rice, and vegetables) vegetables) for  sustained energy. Avoid chocolates and sweets that that produce quick highs and lows in temperament during the exam.

2.

Avoid stimulants stimulants or depres depressants sants that could alter your thinking. thinking.

3.

Don’t rush your meal or or choose choose foods foods that are not not easily easily digeste digested d (fast (fast food). food).

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

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

SU 7: How to Take Take the CMA CMA Exam 

59

7.6 WHAT TO TAKE TAKE TO THE THE EXAM EXAM

Prometric will NOT allow you to bring anything into the exam room. Be prepared to have a drink during breaks. See Prometric rules, regulations, etc., in the following subunits. subunits. Do not bring any study notes or materials to the exam on your person, e.g., e.g., in pockets. If any such notes fall out of your your pocket during the exam, you will will be accused of cheating. The exam proctor  and exam administration system are focused on preventing any cheating. 7.7 TAKING TAKING THE CMA EXAM EXAM

 A few days prior to taking your exam, call your Prometric Testing Center and confirm your  appointment; leave as little as possible to chance. Plan on getting to the testing testing site about 30-60 minutes ahead of your your appointment time. Leave all study materials in your car car or at home. Prometric asks that you arrive 30 minutes early, but they they may ask 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 PROMETR PROMETRIC IC TEST TEST CENTER CENTER RULES RULES

1.

You must must arrive at the the test test center at least 30 minutes before your scheduled appointment. If you arrive after your scheduled appointment time, you may forfeit your appointment and not be eligible to have your examination fees fees refunded. When you arrive, turn off all cell cell phones, beepers, audio alarms on watches, and personal digital assistants.

2.

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

3.

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

4.

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

5.

You will will be required required to sign the Promet Prometric ric log log book book when when you enter the center. center.

6.

You will will be escorted escorted to to a workst workstation ation by test test center center staff. staff. You must must remain remain in your your seat seat during the examination, except when authorized to get up and leave the testing room by test center staff. staff. You may take breaks if you wish, but remember: The clock will not stop while you are away!

7.

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

8.

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

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

60

SU 7: How to Take Take the CMA CMA Exam 

9.

Raise your hand to notify notify the test center center staff staff if  a. b. c. d. e.

You experience experience a problem problem with your computer  computer  An error error message message appears appears on on the comput computer er screen screen (do not clear clear the the message) message) You need additional additional scratch scratch paper or pencils pencils You choose choose to take take a break (testing (testing time time will will not not be suspended) suspended) You need need the the test test center center staff staff for any other reason

10. When you finish finish the examination, examination, quietly leave the testing testing room, turn in your your scratch paper, and sign the test center log book. The test center staff will dismiss you after completing completing all necessary procedures. 7.9 PROMETR PROMETRIC IC TEST TEST CENTER CENTER REGULATI REGULATIONS ONS

 A standardized environment is necessary to ensure that the examination you take is essentially equivalent to the examination all other candidates take. For this reason, all candidates must follow the same 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 CALCULAT CALCULATORS ORS

Simple six-function calculators are permitted (i.e., addition, subtraction, multiplication, division, square root, percent). Alternatively, candidates may choose choose to bring either a Texas Instruments Instruments BAII Plus or a Hewlett Packard Packard 10bII calculator. Feedback from candidates who have have already taken at least one part of the exam using only the six-function calculator, however, has shown that the simpler  calculator will suffice for the the CMA. Candidates should rest assured that time value tables are available for use on questions that demand them. Candidates are responsible for providing their own own calculators. You should be thoroughly experienced in the operations of your calculator. calculator. Make sure it has fresh batteries batteries just prior to the examination. 1. 2. 3. 4. 5. 6.

Consider Consider bringing bringing a backup backup calculator calculator with you. The calculator calculator must be small, quiet, and battery- or solar-powered so it will will not be distracting distracting to other candidates. The calculator calculator may have a memory. memory. However, However, the memory memory must be tempora temporary ry and and erase erase when the memory is cleared or the calculator is turned off. The calculator calculator must not use any type of tape. The calculator calculator must be nonprogramm nonprogrammable. able. Nonconformi Nonconforming ng calculat calculators ors and and calculat calculator or instruc instruction tion books are not not permitte permitted. d.

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

61

SU 7: How to Take Take the CMA CMA Exam 

7.

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

BAII Plus

10bII

7.11 CMA CAN CANDIDAT DIDATE E MISCONDU MISCONDUCT CT AND CHEATIN CHEATING G

If the test center staff suspects misconduct, the grounds for issuing a warning to candidates include Communicating, verbally or otherwise, with another candidate or person (excluding greetings 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 exiting the testing room; Use of any prohibited item during a break in a manner that could result in cheating or the removal of examination questions or simulations. ●

●

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

62

SU 7: How to Take Take the CMA CMA Exam 

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 a sweater. For example, if you require a separate separate sweater or a jacket due to room temperature, or  choose to wear certain jewelry (a pendant necklace or large earrings that could conceal an electronic or  other device), the item must be checked by test center staff for possible concealment of other  prohibited items prior to allowing it into the testing room.

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

SU 7: How to Take Take the CMA CMA Exam 

63

7.12 CHEC CHECKING KING IN AT THE EXAM SITE

When you arrive at the computer testing center, you will be required to check in with your ID and sign the log book. Be sure to bring your authorization letter and appropriate identification. If you have any questions, please call the ICMA at (800) 638-4427. Next, you will be taken taken into the testing room and seated at a computer terminal. You will be provided with pencils and scrap paper. You are permitted to use an accepted accepted calculator (see Subunit 7.10). A person from the testing center will assist you in logging onto the the system, and you will be asked to confirm your personal data. Then you will be prompted and given an online introduction introduction to the 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 the computer testing methodology and environment, and you may want to skip the tutorial and begin the actual test immediately. Once you begin your test, you you will be allowed 4 hours to complete the actual test (3 hours for multiple-choice, multiple-choice, 1 hour for essays). We suggest you allocate 1.5 minutes minutes per question to give yourself time to to review. You may take a break during the exam, exam, but the clock continues to run during your break. Before you leave the testing center, center, you will be required to check out of the testing center. 7.13 7.1 3 BEGINNIN BEGINNING G YOUR YOUR EXAM EXAM

 After you check in with your ID, you will be escorted escorted to a computer station. There will be candidates taking many different exams in the room with you (financial exams, medical exams, etc.) Prometric will provide you with with an opportunity to view an abbreviated abbreviated exam introduction. Work through it so you do not miss miss anything. As you begin the exam, you will do fine because you have experienced the Gleim Prometric look-alike screens. 7.14 7.1 4 COMPUTER COMPUTER PROBL PROBLEMS EMS AT THE THE EXAM 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. computer. At most you will lose a minute of  testing time, according to Prometric. If you have a computer problem, problem, stop and tell/show the exam proctor. Do NOT erase any messages on the screen. Do NOT attempt to circumvent or fix the system. It is a Prometric problem. Note the time it occurred and when it is rectified for your appropriate use 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-alike computer screens in CMA Gleim Online .

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

64

SU 7: How to Take Take the CMA CMA Exam 

7.15 TIME MANA MANAGEME GEMENT NT

 A major issue on the CMA exam 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 bo th parts of the exam. You have to budget 3 hours for 100 multiple-choice questions and at least 1 hour (more if you finished your multiple-choice early) for two essay essay scenarios with 1-4 questions each. Recall that you cannot go back 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 of  1.5 minutes per question and (2) answering an essay scenario in half of your time remaining regardless of how many questions it contains. 1.

Here is our suggestion suggestion for for success successfully fully managing managing your your time time on the CMA CMA exam: exam: Multiple-choice section: 100 questions @ 1.5 1.5 minutes per question 150 min. min. Review Review of unanswered, unanswered, marked marked questions questions 15 min. Section complete in 165 minutes, leaving 15 minutes to carry over to essay section Essa Essay y sect sectio ion: n:

2.

60 min. min. stan standa dard rd time time allo alloca cati tion on + 15 min. min. 1 scenario with 1 question 1 scenario with 3 questions (Per question Section complete in about 75 minutes

75 min. min. 37 min. 37 min. 12 min.)

Since the computer computer screen screen shows shows hours:min hours:minutes: utes:secon seconds ds remaining remaining,, you need to focus on the hour:minutes, NOT time time on your watch or minutes. Throughout your practice exam questions, always think hours:minutes. 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-ch Multiple-choice oice section: section: 3 hours 0 minutes minutes Essay section: 1 hour 15 minutes

3.

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

4.

Use one one page of scratch scratch paper (provid (provided ed at Promet Prometric) ric) for for your your Gleim Gleim Time Management Management System at the exam. As soon as the exam starts, starts, write Multiple-choice section section and Essay section in the left column followed followed by 03:00 and 01:15 next to the the respective sections. As you 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, Software, Test Test Prep Prep for Windows Mobile, and Gleim Online to practice practice answering multiple-choice questions under exam conditions. The expectation is 1.5 minutes per question and a 15-minute review of unanswered/marked questions. This requires you to to become proficient at your multiple-choice questionanswering technique (see Study Unit 4, Subunit 5).

6.

You must must also also practic practice e essays essays under exam conditions. conditions. Use Gleim Online and Essay Essay Wizard Wizard to practice allocating the correct amount of time per question in each each scenario. Gleim Online provides one essay scenario per p er study unit, and Essay Wizard provides two additional essays to practice on. All essays in the Gleim system system are based on topics tested according to the ICMA CSOs.

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

65

IMA MEMBERSHIP AND EXAMINATION FORMS You must apply and become an IMA member in order to participate in the IMA Certification programs. The cost is $195 per year for Regular Regular or International International membership. Young professionals have discounted fees of $130. Full-time faculty dues (in the U.S., Canada, and Mexico) are $98 and dues for full-time students are $39 per year (must carry at least 6 equivalent hours per semester and reside in the U.S., Canada, or Mexico). The IMA offers three member member interest groups at $75 per year: the Controllers Council, the Cost Management Group, and the Small-Business Council. Everyone except students students and young professionals must pay a $15 IMA registration fee. The following two pages can be photocopied and used to apply for IMA membership, or call the IMA at (800) 638-4427 ext. 510 and ask for a CMA “kit.” You may also email the IMA at [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 is required in order to take any of the examination parts.

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

PROMOTIONAL CODE

M E M B E R S H I P s

New Application

PERSONAL INFORMATION (please print)

s

Renewal

s

s

Certification (IMA membership required)

Mr. s Ms. s Mrs. s Miss s Dr Dr..

A P P L I C A T I O N

Last/F Las t/Fami amily ly Nam Name/S e/Surn urname ame:: ___ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ____ _

First/Given Name: _____________________________________________ ______________________________________________________________ _____________________ _________ _____ Middle Initial:________ Suffix: _______ PLC USERS ONL ONLY Y Please Indicate your PLC User ID:

Date of Birth (month/day/year): _____ / _____ /______

Please indicate your contact preference: s

BUSINESS MAILING ADDRESS:

s

HOME MAILING ADDRESS:

(See reverse side to enter SIC,job title,and responsibility codes)

 Title: ___________________________________________ _________________________________________________________________ ______________________

Street/P.O.Box: Street/P .O.Box: _______________________________________ _________________________________________________________ __________________

Company Name: __________________________________________ ________________________________________________________ ______________

______________________________________________________________________

Street/P.O.Box: Street/P .O.Box: ________________________________________ _________________________________________________________ _________________

City: ___________________________________________ __________________________________________________________________ _______________________

______________________________________________________________________

State/Province: __________________________________________ _________________________________________________________ _______________

City: ____________________________________________ __________________________________________________________________ ______________________

Zip Code/Postal Code/Postal Code: ________________________________________ ___________________________________________________ ___________

State/Province: ___________________________________________ _________________________________________________________ ______________

Country: ___________________________________________ ______________________________________________________________ ___________________

Zip Code/Postal Code/Postal Code: _________________________________________ ___________________________________________________ __________

_________________________________ _____________________________ _____________ Phone: (IncludeCountry/Area/City Codes) _________________

Country: ________________________________________ ______________________________________________________________ ______________________ Business Phone: (Include Country/Area/City Codes) ________________________________ ___________________________________________________________________________________ ________________________________________ Fax:___________________________________________ E-mail Address: ___________________________________________

EDUCATION HISTORY

Name of Institution

Degree

Major

Date Received/Expected  

Undergraduate:__________________________________________________________________________________________________________________ Undergraduate:_____________________________________________________________________ _____________________________________________________________ ________________ Graduate:___________________________________________________________________________________________________________________________ Graduate:______________________________________________________________________________ _________________________________________________________ ____________ Professional Designations Earned:

s U.S. CPA

s CFA

s CIA

_______________________________________________________________________ _____________________________ _______ _________ __ s 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:_____________ s Member-At-Large (Check here if no chapter affiliation is desired) s

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

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

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

s

International Member-At-Large

s

75.00 0 each Member Interest Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75.0

s

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

s Controllers Council s Cost Management Group s Small Business Council

Young Professional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $130.00

Compromise (4 CPE) . . . . . . . . . . . . $ s IMA Ethics Series: Success Without Compromise s IMA Ethics Series: Fraud in Financial Reporting (2 CPE) . . . . . . . . . . . . . .$ s IMA Ethics Series: Corporate Ethics: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

(You must be 32 or under and reside in the U.S., Canada,or Mexico)

Birthdate (Required) ________________

75.00* 75. 00* 59.00* 0 0* 40.00* 40.0 0*

From Policy to Practice (2 NASBA CPE) s

s IMA Ethics Series: Embracing Ethics (2 NASBA CPE) . . . . . . . . . . . . . . . . . $ 45.0 45.00* 0* 50.0 .00* 0* s IMA IFRS Series: Embracing IFRS:A Background Primer (2 NASBA CPE) $ 50 s IMA Knowledge Exchange (144 NASBA CPE) . . . . . . . . . . . . . . . . . . . . . . $289.00** s IMA Advantage (200+ NASBA CPE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $289.00** $439.00* .00*** s IMA Knowledge Exchange/Advantage Combo (300+ NASBA CPE) . . . . $439 NASBA CPE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $195.00** s IMA CPEdge (45+ NASBA

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

s

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) ________________

*Valid *Va lid for for 180 180 days days from from date date of purch purchase. ase. s

s

Academic Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98.00

Certification s CMA–CURRENT FORMAT

**Valid **V alid for 365 365 days. days. s CMA–2010 FORMAT

s Entrance Fee (Except for college students and academics in the . . . . . . . . . $200.00

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

U.S.,Canada,and Mexico.Nonrefundable.) s

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

NSTITU ITUTE TE OF MANAGEMENT ACCOUNTANTS, INC. INST

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

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

C. REGI REGISTRA STRATION TION FEES s

PREFERRED METHOD OF PAYMENT

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

s

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

(All payments must be in U.S.Dollars) s

s

s

Felony Conviction Information: If you have been convicted of a felony visit www.imanet.org/explanation.

Check Payments My 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.

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

APPLICANT STATEMENT

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 transfer.Include your name,amount sent,and wire transfer receipt number.

Credit Card Payments Charge my credit card: s AMEX s Discover s MasterCard s VISA

I affirm that the statements on this application are correct, and I agree to abide by the Statement of Ethical Professional Practice. Signatur e: _______ _______ _______ ______ _______ _______ ______ Date: ______ _______ ______

Card Number: _______________ _______________________________ ____________________________ ____________ Exp.: ____________ Cardholder Name: _______________ _______________________________ _________________________________ _________________________ ________ Signature:__________________________________________ Signature:__________________________ _________________________ _____________________ Promotional code (if applicable) ________________________________________ _____________________________________________ _____

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. s

SIC CODE – STANDARD INDUSTRY CLASSIFICATIONS

CMA CERTIFICATION PROGRAM IMA membership required.If you are applying to the certification program for the first time,please check the appropriate box and enclose the Certification Entrance Fee ($200.00) required of new certification applicants only.($75.00 for students and academics in the U.S., Canada Canada,, and Mexico.) Mexico.) s

s

Applying as a Student (U.S.,Canada,and (U.S.,Canada,and Mexico only) — Upon graduation gradu ation,, arran arrange ge for an official c opy of your transcript to be sent. Applying Appl ying as A cademi cademicc ( U.S. U.S.,, Can Canada ada,, and Mexico Mexico only) — Please provide a letter on school stationery affirming full-time teaching status.

Please complete the Additional Educational Information below:

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

selec tin ting g this opti option, on, man manyy applicants applicants cho cho ose Later — B y selec to pr ovi ovide de their their educ educ ati ationa onall cr ede edenti ntials als af af ter c om omple pletin ting g the exams. If you would like to have your credentials reviewed prior to taking the exams to ensu ensure re that they are acceptable,please select select one of the options options b elow elow.. Pleas Please e note that the educ ation ational al requirement must be fulfilled prior to certification.

s

College Graduate — Submit official transcript (translated into English) showing university degree c onferre onferred d and official university vers ity seal, seal, or arrange to have proof of degr degr ee sent directly from university.

(Please Circle One)

01 02 03 16 21 41 51 61 63 81 82 86 90 93 96 99

Educat Educ atio ion n Heal He alth thca care re Media and Ente Entertainm rtainment ent Constru Con struction ction,, Minin Mining,Agricul g,Agriculture ture Manufa Man ufactu cturin ring g Transpo Tra nsportation rtation,, Comm Communica unication, tion, Utilities Wholesale/ Whol esale/Retail Retail Trades Fina Fi nanc nce e Insu In sura ranc nce e Busine Bus iness ss Servic Services es Real Re al Est Estat ate e High Hi gh Tec ech h Nonp No npro rofit fit Gover Go vernme nment nt Pharmaceuticals Pharmace uticals & Biotechno Biotechnology logy Other ______ ____________ ___________ ________ ___

 JOB TITLE CODE (Please Circle One)

05 11 15 31 33 35 41 47 51 55 57 59 65 99

Executiv Execu tive e Officer Officer Corpo Co rporat rate e Officer Officer Vice Vic e Pres Preside ident nt Cont Co ntro roll ller er Chief Finan Financial cial Officer Directo Dir ector/M r/Mana anager ger Supe Su pervi rviso sorr Acco Ac coun unta tant nt Anal An alys ystt Progr Pr ogramm ammer er Admini Adm inistr strati ative ve Cons Co nsul ulta tant nt Acad Ac adem emic ic Other _____ ___________ ____________ _________ ___

RESPONSIBILITY CODE (Please Circle One)

Strategic Finance Magazine

Subscription rates per year: Member Mem bers: s: . . . . . . . . . . . . .$ 48 (Included in dues,nondeductible) Stud St uden entt Memb Member ers: s: . . . . $ 25 (Included in dues,nondeductible) Management Accounting Quarterly  Subscription rates per year: Member Mem bers: s: . . . . . . . . . . . . . $ 10 (Included in dues,nondeductible)

01 05 10 15 20 25 30 33 35 40 45 50 55 60 65 70 75 80

Generall Man Genera Manage agemen mentt Corporate Corp orate Manag Managemen ementt Publi Pu blicc Acc Accoun ountin ting g Genera Gen erall Acc Accoun ountin ting g Personnel Pers onnel Accou Accounting nting Cost Co st Accou Accounti nting ng Governmen Gove rnmentt Accoun Accounting ting Environm Envi ronmental ental Accou Accounting nting Fina Fi nanc nce e Riskk Manage Ris Managemen mentt Budget Bud get and and Plannin Planning g Tax axat atio ion n Intern Int ernal al Auditin Auditing g Educ Ed ucat atio ion n Informati Info rmation on Syst Systems ems Stud St uden entt Reti Re tire red d Other _____ ___________ ____________ _________ ___

MEMBER PROFILE 1. Do you have international responsibilities? s Yes s No 2. Does your your company company have have international international locations? s Yes s No 3. Who will will pay your your IMA IMA dues? dues? s Me s My Company 4. Is your your organ organizat ization: ion: s Public sector s Private sector

s s

Nonprofit Government

5. What are are you looking for most from your IMA Membership? s Certification s Professional networking s Education s Other (please specify) _____________________________ 6. Are you you a member member of any any other association? s AAA s AFP s AICPA s ASWA s CFA Institute (AIMR) s FEI s IIA s Other (please specify) _____________________________ 7. What role role do you play in these associations? associations? s Chapter assistance s National executive volunteer s Member s Ongoing speaker/educator s Regional executive volunteer 8. How did you you learn learn about about IMA? s Chapter meeting s Marketing piece s IMA educational program s Company recommended s IMA website s Industry associate s Industry publication s Professor s Other _________________________________________ s Other website ___________________________________ 9. How many employees are in your your company company or organization? s Under 50 s 51-100 s 101-200 s 201-500 s 501-1,000 s 1,001-10,000 s Over 10,000 10. What is your company’s current annual revenue? s Under $1 million s $500 million - $1 billion s $1 - $10 million s $1 billion - $5 billion s $10 - $100 million s $5 billion - $10 billion s $100 - $500 million s Over $10 billion

Please send your completed application and payment (made out to IMA) to: NSTITU ITUTE TE OF MANAGEMENT ACCOUNTANTS, INC. INST

Rev.1209

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

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

CMA EXAMINATION REGISTRATION FORM

Institute of Certified Management Accountants 10 Paragon Drive  Montvale, New Jersey 07645-1759 07645-175 9 (201) 573-9000 • (800) 638-4427 • FAX: (201) 474-1600

CMA Two Two Part Program (Including Transition Exam) TYPE OR PRINT CLEARLY 

PERSONAL INFORMATION

 Mr.  Ms.  Miss  Mrs.  Dr.



L a s t N a m e/ F a m i l y N am e  P l e a se

IMA Member #

F i r st N a m e/ S u r n am e

ch e ck bo x if th is is a n ew ad dr ess.

Please Specify

Middl e Ini tial 

Home



Suffix

Business

Mailing Address/Street/P.O. Box City

State/Province/Country

Zip Code/Postal Code

Daytime Telephone (include area code or country/city code) E-m ail

Fa x N um b e r : ( I n cl u d e A r e a/ C ou n t ry / Ci t y Co de s )

NOTES:

1. Certif Certification ication entrance entrance fees are NOT REFUNDABLE. 2. After 30 days from the date of registration, examination fees are NOT REFUNDABLE. Within 30 days of the registrat ion date an examination fee may 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 for exam registrations. registrations. Please select the part(s) and testing window(s) you would like to register for. (You must schedule your examination appointment at least three days in 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 following testing 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 testing window.  PART

1 Financial Planning, Performance & Control

 PART

2 Financial Decision Making

 PART T

Transition Exam



May/June



May/June



May/June



Sept/Oct



Sept/Oct



Sept/Oct

TOTAL PARTS

CMA Program $200 Entrance Fee ($75 for Stu dent and Academic Members in the US, Canada, or Mexico new certification app licants only ) The entrance fee for the certification progra m must be paid before taking the examinations. Candidates must complete the CMA program within three years from entry into the program. Candidates also must register for an exam part within the first 12 months of entering the program. If a candidate does not register for 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 successfully completed with in three years of entering the certification program, the passed part will expi re and the entrance fee will have to be repaid. $200 Regular Member Entrance Fee if applicable (MUST BE PAID PRIOR TO TAKING FIRST EXAM) $ 75 Student/Academic Member Entrance Entrance Fee if applicable (U.S., Mexico and Canada) (MUST BE PAID PAID PRIOR TO TAKING TAKING $350 Exami nati on Regis trati on Fee worl dwide per part ....... ............... ............... .............. .............. .............. .............. .............. ............... ............... .............. .............. .............. .............. ............... ............... .............. .............. .............. ............. ...... $ $22 5 Tra nsi tio n Exa m Fee .................................... ..................................... ..................................... ..................................... ..................................... ........... $ Less: Student/Academic Discount (50% students, 50% faculty) (U.S., Mexico and Canada only) Up to two discounted exam parts to be used 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 receive a $100 discount ($300 per part for regular members, $125 p er part for Stude nts/Academics in the US, Canada, or Mexico). ...... ........... .......... .......... ........... ............ ........... .......... .......... ........... ........... .......... .......... ........... ........ $ AMOUNT DUE ................................ .................................... .................................... ...................................... ..................................... .............................$ PLEASE PLEA SE COMP COMPLETE LETE BOTH SIDES

NOTE: PAYM PAYMENT ENT IN FULL MUST ACCO ACCOMPAN MPANY Y REGIST REGISTRATION RATION FORM - FEES SUBJE SUBJECT CT TO CHANG CHANGE E

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

 3     /      1     0   

RETAKE POLICY 

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

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

  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 your

credentials reviewed prior to taking the exams to ensure that they are acceptable, please select one of the options below. Please note that the educational 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 sent directly from university. NOTE: Please pay the entrance fee before submitting your educational credentials.

CONFIDENTIALITY STATEMENT & PAYMENT INFORMATION

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

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

Si gnat ure of A ppli can t:

Date:

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

M y c he he ck ck f or or $

, p ay aya bl bl e t o I CM CM A, A, i s e nc nc lo lo se se d. d. N o ch ec eck s d ra raw n f ro ro m f or or ei ei gn gn b an an ks ks w il il l b e ac ce cep te te d un le le ss ss t he he y ar e p ay ay ab abl e

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

Card Payments Charge my credit card:  VISA

 MasterCard

Credit Card Number:

—

 American

Express —

 Discover

—

Expiration Date:

MM/YY

Promotional Code (if applicable):

Card Holder Name: Signature of Card Holder:

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. 

PLEASE PLEA SE COMP COMPLETE LETE BOTH SIDES

NOTE: PAYM PAYMENT ENT IN FULL MUST ACCO ACCOMPAN MPANY Y REGIST REGISTRATION RATION FORM - FEES SUBJE SUBJECT CT TO CHAN CHANGE GE

10 Paragon Drive • Montvale, New Jersey 07645-1760 • www.imanet.or www.imanet.org g (201) 573-9000 • (800) 638-4427 • Fax (201) 474-1600 Copyright © 2011 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. reserved. Duplication prohibited. www.gleim.com

 3     /      1     0   

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

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

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

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

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

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

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