Financial Accounting CLEP - Free Study Guide!

Name of Exam: Financial Accounting CLEP

Number of Questions: 75

Time Limit: 90 Minutes

ACE Recommended Passing Score: 50

Practice Test Available?: Yes - Click here

Cost: $72 (Starting July 1st 2009) + Sitting Fee (Usually no more than $20) at your testing site. Military can take CLEPs for free with Tuition Assistance. Check with your Educational Officer!

Difficulty 1-5 : 4
(One being the easiest, and five being the hardest)

Alternatives: StraighterLine Accounting 1 and 2 (Financial and Managerial Accounting

Exam Description: The Financial Accounting CLEP covers the knowledge you would learn in a semester at a typical college Financial Accounting course. You will need to be familiar with accounting concepts, terminology, and the reasons behind common accounting procedures.

You will also need to have an understanding in the use and analysis of financial reports and the data on those reports. Finally, you will be given scenarios and problems to solve which will test your mastery of accounting techniques

Personal Thoughts:

In days past, there was a single Principles of Accounting CLEP exam that covered both Financial and Managerial accounting. College Board did away with that exam and replaced it with this. In order to satisfy a Managerial Accounting requirement, you're going to need to look elsewhere. This exam will however satisfy the Financial Accounting requirement for most school's Business degrees.

If you have any experience with accounting or bookkeeping, then most of the information here should look familiar. If you don't, then you'll need to dedicate some time to this one.

Exam breakdown:

According to the College Board website, the Financial Accounting CLEP exam is broken down as follows:

• 30%-40% The Balance Sheet
• 20%-30% General Topics
• 20%-30% The Income Statement
• 05%-10% Statement of Cash Flows
• Less than 5% Miscellaneous

Areas of Study

If you know nothing about accounting and are only studying with free resources, then don't even bother reading the below list. What you need to do instead is go here:

and start at the top and read all of the lessons from top to bottom. It will take you a day or two, but you will cover practically everything you need for the Financial Accounting CLEP. Only then should you use the following list to refresh the specifics on the exam.

I'm not kidding.. I've included the following list only to use as a refresh of specific terms, but if you're walking into this cold, then click on the above link and start reading. Once you've done that, you can take the quizzes and practice tests on the Accounting Coach website and hit the areas you need work on again.

If you don't mind spending a bit of money and $60 (total) fits in your budget, then see my three recommended purchases at the very bottom. Those are what I used for this one. Accounting is not a favorite subject of mine, but those three resources saw me through it.

The Balance Sheet
(30%-40% of the Financial Accounting CLEP exam)

• Cash and Internal Controls
• Valuation of accounts and notes receivable
• Valuation of inventories
• Acquisition and disposal of long-term assets
• Depreciation
• Amortization
• Depletion
• Intangible assets such as patents and goodwill
• Notes payables
• Accounts payables
• Long-term liabilities such as bonds payable - You'll need to scroll down a bit to see the portion on Bonds.
• Owner's equity
• Preferred stock
• Common stock
• Retained earnings
• Liquidity
• Solvency
• Activity analysis

General Topics
(20-30% of the Financial Accounting CLEP exam)

• Generally Accepted Accounting Principles
• Double Entry Accounting
• Transaction Analysis
• Accounting Equation
• Accounting Cycle
• Business Ethics
• Purpose of Financial Statements
• Presentation of Financial Statements
• Relationship between Financial Statements
• Forms of Business

The Income Statement
(20-30% of the Financial Accounting CLEP exam)

• Depreciation
• Recognition of Revenues and Expenses
• Cost of Goods Sold
• Irregular items such as discontinued operations and extraordinary items

Statement of Cash Flow
(5-10% of the Financial Accounting CLEP exam)

• Indirect Method
• Cash Flow Analysis
• Operating, financing and investing activities
• Cash Flow Analysis

Miscellaneous
(Less than 5% of the Financial Accounting CLEP exam)

• Investment
• Contingent Liability

Recommended bargain-priced study resources

Always check your library first! You may be able to find some of these for free. You don't have to buy the officially recommended resources all the time. If you're the type of person that prefers to study from a textbook source however, then please see below.

CLEP Financial Accounting w/ CD-ROM (REA)-The Best Test Prep - Simple to understand an comes with some great quizzes. This one almost made accounting enjoyable. :P

The Accounting Game, 2E: Basic Accounting Fresh from the Lemonade Stand - If accounting makes you break into a cold sweat, then this book is for you!

Reading Financial Reports For Dummies (For Dummies (Business & Personal Finance)) - I bought this on the recommendation of a fellow Instant Cert member, and haven't regretted it. It's now sitting on my desk at work, and I've pulled it out quite a few times to use as a reference. Definitely got my money's worth out of this one.

InstantCert Academy - Financial Accounting Specific Exam Feedback - This is actually a thread for both the Financial and Managerial CLEP exams, but the information for both is in here. If you're already a subscriber, then you definitely check out the flashcards for this one as well. Concentrate on the first five categories. Those are the ones that apply to the Financial Accounting CLEP.

If you don't know what InstantCert is, then click here for the scoop as well as a discount code: **InstantCert Academy**

You'll find an InstantCert link for every exam here if that gives you an idea of the amount of information they have available. It's an outstanding resource.

I usually try to list enough free options for people to pass each CLEP exam. I don't mind paying for quality, but I'll always choose the free option if it's available. If you're going that route, I'd follow my earlier advice and just read all of the Accounting Coach tutorial chapters in order. If you do that, and then refresh and score well on the quizzes to include the Peterson's quiz, you'll be able to walk into the exam with confidence.

Now for the power-testers. If you want to take this thing quickly, and don't mind spending some money, then I'd make three purchases:

• Instant Cert (for the flashcards and exam thread)
• The REA Book (first choice) or The Accounting Game (second choice)
• Reading Financial Reports for Dummies

Less than sixty dollars, and you'll get as much of a guaranteed pass as I'm ever willing to give. Keep the Dummies book after you're done. It's a great desk reference.

Best of luck!