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CMA USA and management accounting glossary

Terms specific to the IMA's Certified Management Accountant credential, alongside the core management-accounting concepts the exam tests.

28 terms defined

IMA
The Institute of Management Accountants. The professional body that awards and administers the CMA (Certified Management Accountant) certification.
CMA
Certified Management Accountant. An IMA credential focused on management accounting and financial management rather than public accounting and audit.
Part 1
Financial Planning, Performance and Analytics. The CMA exam part covering external reporting, planning and budgeting, performance management, cost management, internal controls and technology and analytics.
Part 2
Strategic Financial Management. The CMA exam part covering financial statement analysis, corporate finance, decision analysis, risk management, investment decisions and professional ethics.
IMA membership
Active IMA membership, which is a prerequisite for entering the CMA program and for sitting the exam parts.
CMA entrance fee
The one-time fee paid to enter the CMA program, separate from the per-part exam registration fees.
Testing window
The defined periods during the year in which CMA exam parts can be scheduled at Prometric centres.
Essay section
The written portion of each CMA exam part, presented after the multiple-choice section, requiring constructed responses to scenario-based prompts.
Activity-based costing
ABC. Assigning overhead to products based on the activities that drive those costs, rather than a single volume-based allocation rate.
Balanced scorecard
A performance management framework measuring an organisation across financial, customer, internal process, and learning and growth perspectives.
Contribution margin
Sales revenue less variable costs. The amount available to cover fixed costs and contribute to profit.
Cost of capital
The return an organisation must earn on an investment to maintain the value of its equity and satisfy its providers of finance.
Cost-volume-profit analysis
CVP. Analysis of how changes in volume, selling price, variable cost and fixed cost affect operating profit, including break-even determination.
Direct cost
A cost that can be traced economically and unambiguously to a specific cost object, such as direct materials or direct labour.
Economic value added
EVA. Net operating profit after tax less a charge for the capital employed, measuring value created above the cost of capital.
Fixed cost
A cost that does not change in total within a relevant range of activity, though it changes per unit as volume changes.
Flexible budget
A budget restated for the actual level of activity achieved, allowing variances to be separated from the effect of volume differences.
Internal rate of return
IRR. The discount rate at which an investment's net present value equals zero, used to compare project returns.
Master budget
The comprehensive set of interrelated budgets covering operations, capital spending and financing, culminating in budgeted financial statements.
Net present value
NPV. The present value of an investment's expected cash inflows less the present value of its outflows, discounted at the required rate of return.
Relevant cost
A future cost that differs between alternatives and is therefore relevant to a decision. Sunk costs are never relevant.
Responsibility centre
An organisational unit whose manager is accountable for a defined set of outcomes — cost, revenue, profit or investment.
Standard cost
A predetermined cost per unit of input or output, used as a benchmark against which actual costs are measured.
Sunk cost
A cost already incurred that cannot be recovered and is therefore irrelevant to future decisions.
Transfer pricing
The price charged when one division of an organisation supplies goods or services to another, affecting each division's reported performance.
Variable cost
A cost that changes in total in proportion to activity, while remaining constant per unit within the relevant range.
Variance analysis
Comparison of actual results against budget or standard, with the difference decomposed into price, rate, efficiency and volume components to identify causes.
Working capital management
Managing current assets and current liabilities — cash, receivables, inventory and payables — to maintain liquidity while minimising the cost of funding.

More reference guides

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  • Accounting Dictionary — every term across all guides, indexed A–Z.