Financial Accounting CLEP

Business CLEP Financial Accounting CLEP

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The Financial Accounting examination covers skills and concepts that are generally taught in a first-semester undergraduate financial accounting course. Questions on the exam require you to demonstrate knowledge of accounting concepts and terminology, and ability to use and analyze accounting data and financial reports issued for both internal and external purposes. In addition, you need to demonstrate the ability to apply accounting techniques to simple problem situations involving computations, and understand the rationale for generally-accepted principles and procedures.

The Financial Accounting exam focuses on the skills and concepts taught in an introductory financial accounting course.

The exam contains approximately 75 questions to be answered in 90 minutes. Some of these are pretest questions that will not be scored. Any time candidates spend on tutorials or providing personal information is in addition to the actual testing time.

Knowledge and Skills Required
  • Questions on the Financial Accounting examination require candidates to demonstrate one or more of the following abilities.
  • Familiarity with accounting concepts and terminology
  • Preparation, use, and analysis of accounting data and financial reports issued for both internal and external purposes
  • Application of accounting techniques to simple problem situations involving computations
  • Understanding the rationale for generally accepted accounting principles and procedures

The subject matter of the Financial Accounting examination is drawn from the following topics. The percentages next to the main topics indicate the approximate percentage of exam questions on that topic.

20%–30% - General Topics
  • Generally accepted accounting principles
  • Rules of double-entry accounting/transaction analysis/accounting equation
  • The accounting cycle
  • Business ethics
  • Purpose of, presentation of, and relationships between financial statements
  • Forms of business

20%–30% - The Income Statement
  • Presentation format issues
  • Recognition of revenue and expenses
  • Cost of goods sold
  • Irregular items (e.g., discontinued operations, extraordinary items, etc.)
  • Profitability analysis

30%–40% - The Balance Sheet
  • Cash and internal controls
  • Valuation of accounts and notes receivable (including bad debts)
  • Valuation of inventories
  • Acquisition and disposal of long-term assets
  • Depreciation/amortization/depletion
  • Intangible assets (e.g., patents, goodwill, etc.)
  • Accounts and notes payable
  • Long-term liabilities (e.g., bonds payable)
  • Owner's equity
  • Preferred and common stock
  • Retained earnings
  • Liquidity, solvency, and activity analysis

5%–10% - Statement of Cash Flows
  • Indirect method
  • Cash flow analysis
  • Operating, financing, and investing activities

Less than 5% - Miscellaneous
  • Investments
  • Contingent liabilities
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