The Financial Accounting exam focuses on the skills and concepts taught in a introductory financial accounting course.
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2021 CLEP Official Study Guide
This study guide provides practice questions for all 34 CLEP exams. The ideal resource for taking more than one exam. Offered only by the College Board.
CLEP® Financial Accounting Examination Guide
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The Financial Accounting exam focuses on the skills and concepts taught in an introductory financial accounting course.
The Financial Accounting exam covers skills and concepts that are generally taught in a first-semester undergraduate 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 test takers spend on tutorials or providing personal information is in addition to the actual testing time.
A four-function calculator is available during the exam as part of the testing software.
Knowledge and Skills Required
Questions on the Financial Accounting exam require test takers 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 exam is drawn from the following topics. The percentages next to the main topics indicate the approximate percentage of exam questions on that topic.
General Topics (20%–30%)
- 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 (20%–30%)
- 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 (30%–40%)
- 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 (5%–10%)
- Indirect method
- Cash flow analysis
- Operating, financing, and investing activities
Less than (5%) Miscellaneous
- Contingent liabilities
Most textbooks used in first semester college-level financial accounting courses cover the topics in the outline given earlier, but the approaches to certain topics and the emphases given to them may differ. To prepare for the Financial Accounting exam, it is advisable to study one or more college textbooks, which can be found in most college bookstores. When selecting a textbook, check the table of contents against the knowledge and skills required for this test.
A survey conducted by CLEP found that the following textbooks are among those used by college faculty who teach the equivalent course. You might purchase one or more of these online or at your local college bookstore.
- Horngren et al., Introduction to Financial Accounting (Prentice Hall)
- Libby, Libby, and Short, Financial Accounting (McGraw-Hill)
- Needles and Powers, Financial Accounting (South-Western)
- Phillips, Libby, and Libby, Fundamentals of Financial Accounting (McGraw-Hill)
- Pollard, Mills, and Harrison, Financial and Managerial Accounting (Prentice Hall)
- Porter & Norton, Financial Accounting: The Impact on Decision Makers (South-Western)
- Pratt, Financial Accounting in an Economic Context (Wiley)
- Reimers, Financial Accounting (Prentice Hall)
- Rich et al., Cornerstones of Financial Accounting (South-Western)
- Shim and Siegel, Schaum's Outline of Financial Accounting (McGraw-Hill)
- Stickney and Weil, Financial Accounting: An Introduction to Concepts, Methods and Uses (South-Western)
- Warren, Reeve, and Duchac, Financial Accounting (South-Western)
- Werner and Jones, Introduction to Financial Accounting: A User Perspective (Prentice Hall)
- Weygandt et al., Financial Accounting (Wiley)
- Wild, Financial Accounting Fundamentals (McGraw-Hill/Irwin)
- Williams et al., Financial Accounting (McGraw-Hill/Irwin)
These resources, compiled by the CLEP test development committee and staff members, may help you study for your exam. However, none of these sources are designed specifically to provide preparation for a CLEP exam. The College Board has no control over their content and cannot vouch for accuracy.
- Free online Financial Accounting course by Modern States Education Alliance
- MIT OpenCourseWare: Financial Accounting
- Principles of Accounting: Online Textbook
- University of Alaska Anchorage: Principles of Financial Accounting
Credit-Granting Score for Financial Accounting
ACE Recommended Score*: 50
Semester Hours: 3
Each institution reserves the right to set its own credit-granting policy, which may differ from that of ACE. Contact your college as soon as possible to find out the score it requires to grant credit, the number of credit hours granted, and the course(s) that can be bypassed with a satisfactory score.
*The American Council on Education’s College Credit Recommendation Service (ACE CREDIT) has evaluated CLEP processes and procedures for developing, administering, and scoring the exams. The score listed above is equivalent to a grade of C in the corresponding course. The American Council on Education, the major coordinating body for all the nation’s higher education institutions, seeks to provide leadership and a unifying voice on key higher education issues and to influence public policy through advocacy, research, and program initiatives. Visit the ACE CREDIT website for more information.