Free Certified Management Accountant Practice Exam

The Certified Management Accountant (CMA) exam series is a series of exams developed by the Institute of Management Accountants (IMA). This exam series contains four parts, and it is necessary to pass all four exams to become certified. Three of the parts are computer-based multiple choice tests, and the fourth part is a computer-based essay section. The tests are administered by Thomson Prometric at centers around the United States and internationally.

Prior to registering for any part of the CMA exam, it is necessary to first join the Institute of Management Accountants. This can be done on their website, and the necessary entrance fee of $125 must also be paid at this time. In addition, certain education and experience requirements must also be fulfilled prior to registering for the CMA exam. Specific details about these requirements can be found on the IMA website. Registration for any part of the CMA exam may be done online on the IMA website, by calling IMA directly, or by faxing or mailing the application to IMA. A downloadable copy of the application can be found on the IMA website. On the application, the part of the exam that one wishes to take (one, two, three, or four) should be indicated, and all necessary exam fees must be paid as well. After the application has been received and approved by IMA, the candidate will receive a registration acknowledgment. This acknowledgement contains an authorization number (or numbers, if signed up to take multiple parts of the exam), candidate instructions, and a testing window (or windows). The testing windows for parts one, two, and three of the exam are 120 days. The testing window for part 4 of the exam is one month. Once these materials are received, the candidate then must schedule a testing appointment with Thomson Prometric. This can be done either online or via phone. Locations and testing times can be found on the Thomson Prometric website. The multiple choice parts of the examination (one, two, and three) can be taken any time during the year. Part four of the exam can only be taken in February, May, August, or November. It is important to schedule the examination(s) with Thomson Prometric as soon as possible so the candidate can get their preferred testing date and time. It should be noted that parts one, two, and three must be passed before a candidate can register for and take part four of the CMA examination.

The CMA program consists of four separate CMA examinations. Parts one, two, and three are multiple choice exams and are computer-based in nature. Part four is also computer-based, but consists of written and quantitative responses. Part one of the exam deals with Business Analysis, and it consists of 110 multiple choice questions. These questions deal with the following topics: Business Economics (25%), Global Business (20%), Internal Controls (15%), Quantitative Methods (15%), and Financial Statement Analysis (25%). There are three hours to complete this part of the exam. Part two of the exam deals with Management Accounting and Reporting, and it consists of 140 multiple choice questions. These questions deal with the following topics: Budget Preparation (15%), Cost Management (25%), Information Management (15%), Performance Measurement (20%), and External Financial Reporting (25%). There are four hours to complete this part of the exam. Part three of the CMA exam deals with Strategic Management, and it consists of 110 multiple choice questions. These questions deal with Strategic Planning (15%), Strategic Marketing (15%), Corporate Finance (25%), Decision Analysis (25%), and Investment Decision Analysis (20%). There are three hours to complete this portion of the exam. Finally, part four of the CMA exam deals with Business Applications. This part consists of between three and seven written essays and quantitative responses. These topics deal with all of the specified topics in parts one through three of the CMA exam, as well as organization management, organization communication, behavioral issues, and ethical considerations. There are three hours to complete part four of this examination. Further details about the contents of the four parts of the CMA exam can be found online on the IMA website.

Parts one, two, and three of the CMA exam are each first given a raw score in the scoring process. The raw score is the number of test items answered correctly. There is no penalty for incorrect answers, and each question has an equal weight and point value. Because of differences in exam versions and their difficulty, all raw scores are then converted to scaled scores. The scaled scores for each of the multiple choice parts of the exam range from 200 (low) to 700 (high). A passing scaled score is 500. If a passing score is not achieved, a Detail of Performance report is sent to the candidate within two to three weeks following the exam. This report shows how the candidate performed on each topic, and this helps with study for future attempts at the exam. A score report is also available immediately after the completion of each of the multiple choice sections of the exam. Part four of the CMA exam is not graded by a computer, rather, it is graded by subject matter experts. The scores on this part of the exam are noted as pass or fail, and all grades will be mailed to candidates approximately thirty days after taking the exam.

Prior to taking any part of the CMA exam, there are several ways in which one can prepare. First, knowing the content and structure of the CMA exam is useful. This will help with knowing what areas should be studied to be fully prepared to take the exam. A suggested reading list for use in studying can also be found online on the IMA website. In addition, taking sample tests and answering sample questions can also help gauge performance and indicate areas that need further attention. On the day of the exam, it is important to make sure that all test items are answered, since leaving answers blank counts as incorrect responses. It is best to guess the answer if the correct answer to a particular item is not known. In addition, pacing during the exam is crucial, so as to make sure that all test items are answered. A calculator is also allowed to be used during the examinations, so making sure that an approved calculator is brought to the exam is important. Details about the types of calculators that may be used during the examinations can be found online. And, finally, taking advantage of the computer tutorial before each examination section is also useful.

CMA Study Guide

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Practice Questions

1. Which forecasting technique gives more weight to newer data and less weight to older data?

a. Time series analysis
b. Exponential smoothing
c. Multiple regression analysis
d. Payback technique

2. Organizations use Kaizen budgeting to...

a. allocate funds and resources to projects
b. determine how the budget will attain the organization's goals
c. continually improve the budgeting process
d. allocate funds and resources based on activity or process

3. A master budget's purpose is to...

a. control the day to day operations of the organization
b. determine the goals of the organization for a 10 year period
c. allocate resources for capital expansion
d. allow for changes in the budget based on performance

4. What is the major difference between a static budget and a flexible budget?

a. The budget period used to forecast production results
b. The types of revenues and costs associated with the projected production
c. The ability to modify budget figures based on actual production
d. The number of production levels that are used in the forecast

5. Which of the following is NOT considered part of the production budget?

a. Manufacturing costs
b. Distribution costs
c. Inventory levels
d. Supervisor salaries

Answer Key

1. B: Exponential smoothing. Exponential smoothing uses a weighted moving average of historical data as the forecasting basis, giving more weight to recent data and less weight to older data. New data is given more weight because the future is more likely to resemble the recent past rather than the distant past. Exponential smoothing is used for short-term forecasting for financial market and economic data. To calculate exponential smoothing, a new forecast is the sum of the old forecast plus a percentage of the difference between the old forecast and the actual data for that same time period.

2. C: Continually improve the budgeting process. In Kaizen, each aspect of the budgeting process is evaluated to implement improvements to be incorporated into the next budgeting cycle. It favors small changes on a regular basis, rather than infrequent but sweeping changes. Kaizen is the Japanese term for "continuous improvement." Project budgeting allocates money and resources to individual projects such as the construction of facilities, acquisition of land, or purchase of equipment. Zero-based budgeting requires budgeted figures to be justified for each new budget period, and show how the budget will attain the goals of the organization. Activity-based budgeting, based on activities and business processes, forecasts labor and financial resources needed to achieve an organization's goals.

3. A: Control the day to day operations of the organization. The master budget is also known as the annual budget: It's the compilation of the budgets of each individual department, and consists of sales, production and cash budgets, and forecasted balance sheet. The annual budget outlines the organization's plans for its fiscal year and controls the day to day operations, setting priorities for accomplishing the long-term goals of the organization by allocating resources to each of the activities outlined in the organization's strategic plan.

4. D: The number of production levels that are used in the forecast. Static budgets forecast one level of production results for a given budget period, and the associated costs. Flexible budgets project revenues and costs for several production levels. Static budgets often differ from actual results, since assumptions about input and output values are made prior to the start of the budget period and are not changed. A flexible budget is based on actual output, and when compared with the static budget, variances become apparent. Flexible budgeting allows for change during the budget period; management can see variances between budget and actual results and take action to improve performance. Flexible budgets compare actual costs with projected costs for the actual production level in order to provide greater control over costs.

5. B: Distribution costs. Distribution costs are a part of the selling and administrative budget. The production budget is an estimate of the amount of product an organization will need to produce during the budget period. The production budget consists of overhead costs that are directly related to manufacturing, and includes forecasts for material, labor, manufacturing supplies, supervisor salaries, factory maintenance, equipment repair, and utilities. Management uses the sales budget and forecasted inventory levels to determine the production budget.


Last Updated: 07/05/2018

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