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1. About this Course

It covers the fundamentals taught in a first-semester undergraduate financial accounting course.

"In this course we will progressively go through the different stages of accounting principles, the exploration of significant financial statements used in accounting, including over 20 components vital to their implementation in business operations. Furthermore, we will discuss key components used in business transaction, and how to monitor them for best practices. We will conclude with an exploration of miscellaneous elements that are attributed to financial accounting and business longevity. This course will include rules, regulations, and formulas used across the world in business operations, as it pertains to Accounting," explains our instructor Dr. Brian Kelly.

The CLEP exam contains approximately 75 questions to be answered in 90 minutes. Some of these are pretest questions that will not be scored.

The goal of the creator of this course – Modern States Education Alliance, a non-profit organization – is to prepare you to pass the College Board's CLEP examination and obtain college credit for free.

Our “Financial Accounting” course is completely self-paced. There are no prerequisites to take this course, and it is entirely free. By watching the videos a number of times, reviewing the modules, reading the supplementary texts and doing the practice questions, you should be well prepared for the CLEP exam.  

2. Required Knowledge and Skills

The CLEP exam requires you 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

3. Course Modules

Following are the main topics and percentages of the exam’s questions, mostly based on the College Board's description of the course:


Module 1: General Topics (20%-30%)

  1.0 Introduction

  1.1 Generally Accepted Accounting Principles (GAAP)

1.1.1 Summary

  1.2 Rules of Double-Entry Accounting/Transaction Analysis/Accounting Equation

1.2.1 Rules for Double-Entry Accounting

1.2.2 Rules of Transaction Analysis

1.2.3 Rules of the Accounting Equation

  1.3 The Accounting Cycle

  1.4 Business Ethics

  1.5 Purpose of, Presentation of, and Relationships Between Financial Statements

1.5.1 Purpose of Financial Statements

1.5.2 Presentation of Financial Statements

1.5.3 Relationships Between Financial Statements

  1.6 Forms of Business

  1.7 Summary


Module 2: The Income Statement (20-30%)

  2.0 Introduction

  2.1 Presentation Format Issues

  2.2 Recognition of Revenue and Expenses

  2.3 Cost of Goods Sold

  2.4 Irregular Items (e.g., Discontinued Operations, Extraordinary Items, etc.)

  2.5 Profitability Analysis

  2.6 Summary


Module 3: The Balance Sheet (30-40%)

  3.0 Introduction 

  3.1 Cash and Internal Controls

  3.2 Valuation of Accounts/Notes Receivable (Including Bad Debts)

3.2.1 Valuation of Accounts Receivable

3.2.2 Valuation of Notes Receivable (Including Bad Debts)

  3.3 Valuation of Inventories

  3.4 Acquisition and Disposal of Long-Term Assets

3.4.1 Acquisition of Long-Term Assets

3.4.2 Disposal of Long-Term Assets

  3.5  Depreciation/Amortization/Depletion

3.5.1 Depreciation

3.5.2 Amortization

3.5.3 Depletion

  3.6 Intangible Assets (e.g., Patents, Goodwill, etc.)

  3.7 Accounts and Notes Payable

3.7.1 Accounts Payable

3.7.2 Notes Payable

  3.8 Long-term Liabilities (e.g., Bonds Payable)

  3.9 Owner's Equity

  3.10 Preferred and Common Stock

3.10.1 Preferred Stock

3.10.2 Common Stock

  3.11 Retained Earnings

  3.12 Liquidity, Solvency, and Activity Analysis

3.12.1 Liquidity Analysis

3.12.2 Solvency Analysis

3.12.3 Activity Analysis

  3.13 Summary

3.13.1 Summary

3.13.2 Summary


Module 4: Statement of Cash Flows (5%)

  4.0 Introduction   

  4.1 Indirect Method 

  4.2 Cash Flow Analysis 

  4.3 Operating, Financing, and Investing Activities

4.3.1 Operating Activities

4.3.2 Investing Activities

4.3.3 Financing Activities

  4.4 Summary


Module 5: Miscellaneous Accounting Components  (Less than 5%)

  5.0 Introduction   

  5.1 Investments 

  5.2 Contingent Liabilities

  5.3 Summary

4. About Dr. Brian Kelly, Farmingdale State College SUNY

Dr. Brian Kelly is a full-time Assistant Professor within the Department of Security Systems and Law Enforcement Technology at Farmingdale State College, State University of New York (SUNY), where he is in his 14 th year of higher education instruction. He has instructed such courses as Forensic Accounting, Data Mining Tools, Fraud Examination, and Business Law, amongst others. Brian also serves as an Advisory Council Member for the Association of Certified Fraud Examiners, and maintains security clearance as a government contractor.

Dr. Kelly is a retired law enforcement officer and investigator from the state of New Jersey, where he served the public in the fields of Corrections, Office of Inspector General, Office of the Attorney General, and the NJ Transit Police Department. As an investigator, Brian has conducted audits and anti-fraud examinations where he has prevented over 5,000,000 dollars in accounting-based losses.

Brian is a Doctor of Education who graduated from Seton Hall University, and remains current in the field as a practitioner in private sector roles including nationally designated Certified Fraud Examiner, Licensed Private Detective, Certified Financial Crimes Investigator, and as a guest lecturer for Anti-fraud curriculum and Deception for the New York region of the Association of Certified Fraud Examiners.

5. How CLEP Works

Developed by the College Board, CLEP (College-Level Examination Program®) is the most widely accepted credit-by-examination program.

CLEP’s credits are accepted by 2,900 colleges and universities, according to the College Board. These tests assess college-level knowledge in 33 subject areas.

Modern States Education Alliance is the non-profit organization behind these edX-style courses. Its project is called “Freshman Year for Free” and its mission is to make college more accessible and affordable through free, high-quality online education.

• CLEP® Financial Accounting: at a Glance

• 'Passing the CLEP and Learning with Modern States' orientation course