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- 35-page printable PDF
- 175 terms with examples
- 44 practice questions, answers explained
- 2-page cram sheet and study plans
← CLEP Financial Accounting course
CLEP® Study Guide
Printable PDF · 35 pages
CLEP Financial Accounting Study Guide
Everything the CLEP Financial Accounting exam tests, in one PDF you can print. Built from the College Board's official outline, heaviest topics first.
- 175 key terms, each with an example
- 44 practice questions with every answer explained
- A 2-page cram sheet for the night before
- 2-, 4- and 8-week study plans built from the exam weights
Last updated 2026 · exam details checked against the College Board's published exam information in 2026
Look inside the guide
Real pages from the 35-page PDF.
What you get for $5
One chapter for each official content area, in the order the exam weighs them.
- 📘35pages, printable
- 🧭5chapters, heaviest first
- 🔑175terms with examples
- ✍️44practice questions, answers explained
- ⚠️14exam traps to avoid
- 📄2page cram sheet
Try 10 free Financial Accounting questions
In the style of the real exam, from all 5 areas. About 10 minutes, with every answer explained and a score by area.
10 questions
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Question 1 · The Balance Sheet
A company's bank statement shows a balance of $8,400. Deposits in transit total $1,200 and outstanding checks total $900. The statement also shows a $300 NSF check that the company has not yet recorded. What is the company's correct cash balance?
Show the answer
Answer: A. $8,700. Adjust the bank side: $8,400 + $1,200 − $900 = $8,700. The bank has already deducted the NSF check, so it adjusts only the book side, which must also end at $8,700.
The trap: $8,400 subtracts the NSF check on the bank side too. The bank has already deducted it, so it adjusts only the book balance.
Adjust the bank side: $8,400 + $1,200 − $900 = $8,700. The bank has already deducted the NSF check, so it adjusts only the book side, which must also end at $8,700.
The trap: $8,400 subtracts the NSF check on the bank side too. The bank has already deducted it, so it adjusts only the book balance.
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Question 2 · General Topics
A business has total assets of $80,000 and total liabilities of $30,000. It then buys equipment for $10,000 on account. After the purchase, what is the owner's equity?
Show the answer
Answer: C. $50,000. The purchase raises both assets and liabilities by $10,000, so equity is unchanged: $80,000 + $10,000 = $90,000 in assets, less $40,000 in liabilities, leaves $50,000.
The trap: $60,000 adds the equipment to assets but forgets that the amount owed rose by the same $10,000.
The purchase raises both assets and liabilities by $10,000, so equity is unchanged: $80,000 + $10,000 = $90,000 in assets, less $40,000 in liabilities, leaves $50,000.
The trap: $60,000 adds the equipment to assets but forgets that the amount owed rose by the same $10,000.
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Question 3 · The Income Statement
During the year a retailer had sales of $100,000, sales returns and allowances of $4,000, sales discounts of $2,000 and cost of goods sold of $60,000. Gross profit is
Show the answer
Answer: D. $34,000. Net sales = $100,000 − $4,000 − $2,000 = $94,000. Gross profit = $94,000 − $60,000 = $34,000.
The trap: $94,000 is net sales. Gross profit still requires subtracting cost of goods sold.
Net sales = $100,000 − $4,000 − $2,000 = $94,000. Gross profit = $94,000 − $60,000 = $34,000.
The trap: $94,000 is net sales. Gross profit still requires subtracting cost of goods sold.
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Question 4 · Statement of Cash Flows
A company reports net income of $30,000, depreciation expense of $6,000, a $4,000 increase in accounts receivable, a $2,000 increase in accounts payable and a $1,000 gain on the sale of equipment. Using the indirect method, what is net cash from operating activities?
Show the answer
Answer: E. $33,000. Start with $30,000. Add depreciation $6,000, subtract the receivables increase $4,000, add the payables increase $2,000 and subtract the gain $1,000: $33,000.
The trap: $35,000 adds the gain instead of subtracting it. The gain is not operating cash; the sale proceeds belong in investing.
Start with $30,000. Add depreciation $6,000, subtract the receivables increase $4,000, add the payables increase $2,000 and subtract the gain $1,000: $33,000.
The trap: $35,000 adds the gain instead of subtracting it. The gain is not operating cash; the sale proceeds belong in investing.
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Question 5 · Miscellaneous
An investor pays $200,000 for 30% of a company's stock and has significant influence over it. During the year the investee reports net income of $80,000 and pays total dividends of $20,000. At year-end, what is the investment balance under the equity method?
Show the answer
Answer: B. $218,000. Investment = $200,000 + 30% of income ($24,000) − 30% of dividends ($6,000) = $218,000.
The trap: $224,000 adds the share of income but forgets that dividends received reduce the investment under the equity method.
Investment = $200,000 + 30% of income ($24,000) − 30% of dividends ($6,000) = $218,000.
The trap: $224,000 adds the share of income but forgets that dividends received reduce the investment under the equity method.
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Question 6 · The Balance Sheet
A small retailer has one employee who opens the mail, lists the customer checks, prepares the bank deposit and posts the payments to customer accounts. Which change would best strengthen internal control?
Show the answer
Answer: A. Have a different employee post the payments to the customer accounts. Internal control relies on separation of duties. When a second person handles the records, no single employee can take a payment and hide it.
The trap: Letting the same employee reconcile the bank statement adds another duty to the same person, so it weakens control rather than strengthening it.
Internal control relies on separation of duties. When a second person handles the records, no single employee can take a payment and hide it.
The trap: Letting the same employee reconcile the bank statement adds another duty to the same person, so it weakens control rather than strengthening it.
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Question 7 · General Topics
A dance studio receives $1,200 in advance for 12 lessons it will teach next month. Which entry records the receipt?
Show the answer
Answer: E. Debit Cash $1,200; credit Unearned Revenue $1,200. Cash increases (debit). The studio now owes lessons, which is a liability, so Unearned Revenue is credited. Revenue is recorded as the lessons are taught.
The trap: Crediting Service Revenue records revenue that has not been earned yet, because no lesson has been taught.
Cash increases (debit). The studio now owes lessons, which is a liability, so Unearned Revenue is credited. Revenue is recorded as the lessons are taught.
The trap: Crediting Service Revenue records revenue that has not been earned yet, because no lesson has been taught.
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Question 8 · The Income Statement
A company reports beginning inventory of $10,000, purchases of $40,000, purchase returns of $2,000, purchase discounts of $1,000, freight-in of $3,000 and ending inventory of $14,000. Cost of goods sold is
Show the answer
Answer: C. $36,000. Net purchases = $40,000 − $2,000 − $1,000 = $37,000. Goods available = $10,000 + $37,000 + $3,000 = $50,000. COGS = $50,000 − $14,000 = $36,000.
The trap: $50,000 is the cost of goods available for sale. Ending inventory must still be subtracted.
Net purchases = $40,000 − $2,000 − $1,000 = $37,000. Goods available = $10,000 + $37,000 + $3,000 = $50,000. COGS = $50,000 − $14,000 = $36,000.
The trap: $50,000 is the cost of goods available for sale. Ending inventory must still be subtracted.
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Question 9 · Statement of Cash Flows
Which of the following is reported as a financing activity on a US GAAP statement of cash flows?
Show the answer
Answer: D. Payment of cash dividends to shareholders. Dividends paid to the company's own shareholders are a return to owners, so they are a financing outflow.
The trap: Interest paid on a loan is tempting because the loan is financing, but US GAAP classifies interest paid as operating.
Dividends paid to the company's own shareholders are a return to owners, so they are a financing outflow.
The trap: Interest paid on a loan is tempting because the loan is financing, but US GAAP classifies interest paid as operating.
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Question 10 · Miscellaneous
A company buys 100 shares of another corporation's stock at $40 per share. The small stake gives it no significant influence. At year-end the shares trade at $46. Under current US GAAP, how is the change reported?
Show the answer
Answer: B. A $600 unrealized gain in net income. Stock held without significant influence is carried at fair value, and unrealized gains and losses go to net income: 100 × ($46 − $40) = $600.
The trap: Other comprehensive income was used for available-for-sale stock under the old rules. Under current GAAP, only available-for-sale debt securities use it.
Stock held without significant influence is carried at fair value, and unrealized gains and losses go to net income: 100 × ($46 − $40) = $600.
The trap: Other comprehensive income was used for available-for-sale stock under the old rules. Under current GAAP, only available-for-sale debt securities use it.
The CLEP Financial Accounting exam at a glance
The CLEP Financial Accounting exam is a 90-minute, computer-based test from the College Board with about 75 multiple-choice questions. A score of 50 on the 20–80 scale earns an ACE credit recommendation of 3 semester hours, though each college sets its own policy. The exam covers 5 content areas; the heaviest is the Balance Sheet at 30–40%.
- Questions
- About 75multiple choice
- Time
- 90 minabout 72 seconds a question
- Passing score
- 50on a 20–80 scale
- ACE credit
- 3semester hours
- Exam fee
- $97paid to College Board
- Calculator
- Yeson-screen calculator provided
What the exam covers
5 areas, heaviest first. The guide's chapters follow this order.
- The Balance Sheet30–40%
- General Topics20–30%
- The Income Statement20–30%
- Statement of Cash Flows5–10%
- Miscellaneous1–5%
How it works
- 1Buy once, $5Secure checkout. No subscription needed.
- 2Download the PDFFrom your TransferCredit.org account, right away and any time later.
- 3Study the heaviest areas firstFollow the 2-, 4- or 8-week plan, then read the cram sheet the night before.
Questions students ask
What's in the full CLEP Financial Accounting study guide?
35 pages: 5 chapters, one per official content area, heaviest first. 175 terms, each with a plain-English definition and an example, common traps and memory tricks, 44 practice questions with an answer key that explains every answer, question tactics, 2-, 4- and 8-week study plans and a 2-page cram sheet.
How much is the full CLEP Financial Accounting study guide?
The full 35-page PDF is $5, a one-time payment. The 10 practice questions on this page are free, with no account.
What does the $29 plan include?
$29 a month gives you all 28 CLEP subjects: every CLEP study guide plus the full prep course for each subject, and you can cancel anytime. If you only need this exam, the guide on its own is a one-time $5.
How do I get the full guide?
Choose Buy this guide ($5) and check out. Then sign in to your TransferCredit.org account, then open the course and its Download Your Study Guide lesson. The PDF is yours to keep, and you can download it again from your account at any time.
Can I print the guide or use it on my phone?
Yes. It's a PDF, so it opens on phones, tablets and computers, and printing is allowed. Its tick boxes and answer bubbles work in PDF readers that support forms. Copying and editing are turned off.
Is this an official CLEP study guide?
No. CLEP® is a registered trademark of the College Board, which was not involved in producing this guide and does not endorse it. TransferCredit.org is independent. We built the guide from the official exam outline, and the exam details were checked against the College Board's published exam information in 2026.
Why is this study guide better than a generic review?
It follows the official outline area by area and spends the most pages on what the exam weighs most. Every term comes with an example, each chapter names the traps the exam sets, and the answer key explains why the most tempting wrong answer is wrong, not just which answer is right. It ends with a 2-page cram sheet for the night before.
What is the CLEP Financial Accounting exam?
The CLEP Financial Accounting exam is a 90-minute, computer-based test from the College Board with about 75 multiple-choice questions. A score of 50 on the 20–80 scale earns an ACE credit recommendation of 3 semester hours, though each college sets its own policy. The exam covers 5 content areas; the heaviest is the Balance Sheet at 30–40%.
More questions about the CLEP Financial Accounting exam (22)
How many questions are on the CLEP Financial Accounting exam, and how long is it?
It has approximately 75 questions to be answered in 90 minutes, and some are pretest questions that will not be scored.
What is the passing score for CLEP Financial Accounting?
The passing score is 50 on a 20–80 scale. At 50 or above, the American Council on Education (ACE) recommends 3 semester hours. Each college sets its own passing score and credit award, so check your school's policy before you book.
How much does the CLEP Financial Accounting exam cost?
The exam fee is $97, paid to the College Board. Test centers may add their own administration fee. Eligible U.S. military service members can usually test for free through DANTES.
How many college credits is CLEP Financial Accounting worth?
ACE recommends 3 semester hours for a passing score of 50. Your college decides how many credits it awards and which course they replace. Check your college's policy.
Can I use a calculator on the CLEP Financial Accounting exam?
A four-function calculator is available during the exam as part of the testing software.
Is there a penalty for guessing on CLEP Financial Accounting?
No. Your score counts only correct answers, so a wrong answer costs nothing. Never leave a question blank: rule out what you can and pick your best guess.
What topics are on the CLEP Financial Accounting exam?
5 content areas, from the official outline: The Balance Sheet (30–40%); General Topics (20–30%); The Income Statement (20–30%); Statement of Cash Flows (5–10%); Miscellaneous (1–5%).
Which CLEP Financial Accounting topics should I study first?
Start with the three heaviest: the Balance Sheet (30–40%), General Topics (20–30%) and the Income Statement (20–30%). Together they are about 85% of the exam, roughly 67 of 75 questions. The guide's chapters run in that order, heaviest first.
Is the CLEP Financial Accounting exam hard?
It depends on what you already know. A few big areas decide most of your score: the Balance Sheet alone is 30–40% of the exam, while Miscellaneous is 1–5%. Take the free diagnostic above to see where you stand in about 10 minutes.
What kinds of questions are on the CLEP Financial Accounting exam?
The guide sorts them into 5 types: “Journal entry or transaction analysis”, “Compute a subtotal from a list of amounts”, “Match a practice to a principle”, “Ratio and analysis” and “Where is it reported?”. Every question has 5 answer choices. Try the 10 free questions above to see the style.
How long should I study for CLEP Financial Accounting?
Use the diagnostic to decide. If you already know most areas, two weeks of daily review is often enough; if the subject is new to you, plan on eight. The full guide has 2-, 4- and 8-week plans built from the exam weights.
How should I pace myself on the CLEP Financial Accounting exam?
On average you have about 72 seconds per question (90 minutes for 75 questions). Be past question 25 a third of the way through and past question 50 two-thirds through. If a question takes more than a minute, pick your best guess, mark it and come back.
What happens if I don't pass CLEP Financial Accounting?
You can retake a CLEP exam after three months. Use the wait to work through the areas the score report and the diagnostic show you missed.
Do colleges accept CLEP Financial Accounting for credit?
CLEP exams are accepted at more than 2,900 U.S. colleges and universities, but each school decides which exams it accepts, the score it requires and the credit it gives. Look up your college's CLEP policy before you book.
How is the guide different from the CLEP Financial Accounting course?
The guide is a 35-page PDF for review and self-testing. The CLEP Financial Accounting course is a full online course with lessons, quizzes and a practice exam, for $19 with lifetime access. Many students use the guide first, then take the course for the areas the diagnostic flags.
How up to date is this CLEP Financial Accounting guide?
Last updated 2026. The exam details were checked against the College Board's published exam information in 2026. Exams change, so confirm the details on the official exam page before you register.
What should I do the night before the exam?
Read the cram sheet once, slowly. Check your test time, the location or remote-proctoring setup, and the ID you need. Then sleep: a rested brain recalls more than a crammed one. In the morning, skim the memory tricks and common traps, then stop studying.
What is the most tested topic on CLEP Financial Accounting?
The balance sheet, at 30–40% of the exam. It covers cash and internal controls, receivables and bad debts, inventory valuation, depreciation, intangibles, bonds payable, stock and retained earnings, and liquidity and solvency ratios.
Which cash flow statement method is on CLEP Financial Accounting?
The indirect method, which starts from net income and adjusts for noncash items and changes in working capital. The statement of cash flows is 5–10% of the exam and also tests classifying operating, investing and financing activities.
What is the difference between financial and managerial accounting?
Financial accounting reports a company's results to outsiders through the balance sheet, income statement and cash flow statement under GAAP. Managerial accounting produces internal information such as costs, budgets and variances for decision-making. The CLEP exam tests financial accounting.
Does CLEP Financial Accounting cover managerial accounting?
No. The exam covers financial accounting only. Cost and budgeting topics help with analysis questions, but the tested content is GAAP, the accounting cycle and the financial statements.
Does CLEP Financial Accounting require journal entries?
You won't write entries, but many questions test the logic behind them: which accounts a transaction affects and how it changes the accounting equation and the statements.
Choose how you want to study
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CLEP® is a registered trademark of the College Board, which was not involved in producing this guide and does not endorse it. TransferCredit.org is independent and not affiliated with the College Board. © 2026 UPI Globale Edu Inc.