CLEP Financial Accounting Study Guide

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CLEP Financial Accounting Study Guide

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
• Valuation of inventories
• Acquisition and disposal of long-term asset
• 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


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