Notes from CMA US Part One Lecture

Introduction

• Class administered by IPFC Academy.
• Mr. Salgunty introduced as the instructor for CMA US Part One.
• Emphasis on muting microphones and turning off cameras to avoid distractions.

Instructor Background

• Mr. Salgunty: 23-24 years of experience, 7-8 months with IPFC.
• Qualified in CMA US, ACMA India, CPA Australia.
• Shifted to teaching after working in consultancy.

Class Structure and Expectations

• Structure: CMA Part One consists of six sections (A to F).
• Importance of taking notes during the lecture.
• Overview of topics covered in Part One:
  • Section A: External Financial Reporting (EFR)
  • Section B: Planning, Budgeting, and Forecasting
  • Section C: Performance Management
  • Section D: Cost Management
  • Section E: Internal Controls
  • Section F: Technology and Analytics
• Aim for interactive and enjoyable learning experience.

Preparation Tips for CMA

• Familiarize with the syllabus before diving into studies.
• Understand the exam style - "Mild Wide Inch Deep" concept.
• Focus on essential topics without deep diving into every detail.
• Importance of understanding financial statements and their preparation.
  • Key Accounting Frameworks: GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards).

Financial Statements Overview

• Major financial statements:
  • Statement of Income (Profit & Loss)
  • Balance Sheet (Statement of Financial Position)
  • Statement of Cash Flows
  • Statement of Changes in Equity
  • Statement of Other Comprehensive Income
• Focus on U.S terminology:
  • Statement of Income instead of Profit & Loss
  • Statement of Financial Position instead of Balance Sheet
  • Statement of Other Comprehensive Income (OCI)
• Relationship between statements: Income Statement primarily prepared from the Trial Balance.

Key Concepts in Financial Reporting

Accrual Basis of Accounting

• Accruals: Recognizing revenue when earned and expenses when incurred regardless of cash transactions.
• Cash Basis: Recording transactions only when cash is received or paid.

Income Statement Structure

• Fundamental structure:
  • Revenues - Expenses = Net Income (or Loss)
• Key terms explained:
  • Recurring vs Non-recurring items
  • Gains and Losses: Includes non-recurring income events related to the main operations.
• Types of income statements:
  • Multi-Step Income Statement: Includes gross profit.
  • Single-Step Income Statement: Simple format without gross profit.

Discontinued Operations

• Recognizing gains/losses on discontinued operations.
• Discontinued operation can lead to adjustments in net income, affecting overall financial statements.

Wrap Up and Homework

• Download annual report of any U.S. corporation (search: "<Company Name> 10-K 2021").
• Focus in next class on Statement of Other Comprehensive Income (OCI).
• Reminder on maintaining a folder for class notes and materials.
• Ensure to actively participate and create a question-based learning atmosphere.

Additional Notes

• Good practice to interact and clarify doubts during the sessions.
• Encouragement for taking detailed notes and asking questions.

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