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Home > College Board Tests > CLEP: Exam Descriptions > Financial Accounting

Financial Accounting

In January 2007, the College-Level Examination Program (CLEP) introduced the new Financial Accounting exam

Description of the Examination

The equivalent to a one-semester course, Financial Accounting replaces the Principles of Accounting exam, which covers two semesters of knowledge—Financial Accounting and Managerial Accounting.

The computer-delivered exam is 90 minutes in length and consists of 75 questions.

Knowledge and Skills Required

The purpose of the exam is to assess student mastery of the skills and concepts required for success in a first-semester financial accounting course. Exam questions require students to demonstrate that they:

  • Are familiar with accounting concepts and terminology
  • Have an understanding of the preparation, use, and analysis of accounting data and financial reports issued for both internal and external purposes
  • Can apply accounting techniques to problem-solving situations involving computations
  • Understand 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 percentages of exam questions on those topics.

Approximate Percent of Examination

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 such as discontinued operations and extraordinary items
  • 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 such as patents and goodwill
  • Accounts and notes payable
  • Long-term liabilities such as 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