Description of the Examination
The Financial Accounting examination covers skills and concepts that are generally taught in a first-semester undergraduate financial accounting course. Colleges may award credit for a one-semester course in financial accounting.
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.
- 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
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
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
- 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
Statement of Cash Flows
- Indirect method
- Cash flow analysis
- Operating, financing, and investing activities
Less than 5%
- Contingent liabilities
Want to get a feel for the tests? Try out sample questions from actual CLEP exams in the subject of your choice.
Find out if your institution accepts CLEP.