Course

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.

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