Financial Accounting

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

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Overview

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.

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
  • 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

Statement of Cash Flows (5%–10%)

  • Indirect method
  • Cash flow analysis
  • Operating, financing, and investing activities

Miscellaneous (Less than 5%)

  • Investments
  • Contingent liabilities

Score Information

ACE Recommendation for Financial Accounting

Credit-granting Score 50
Semester Hours 3

Note: Each institution reserves the right to set its own credit-granting policy, which may differ from the American Council on Education (ACE). Contact your college to find out the score required for credit and the number of credit hours granted.

Add Study Guides

CLEP Financial Accounting Examination Guide

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

  • PDF
  • $10.00

2022 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 College Board.

  • Book
  • $24.99