Financial and Managerial Accounting

Specific Competencies and Skills Tested in this Assessment:

 

Journalizing

• Understand the theory of double entry accounting
• Journalize accounting transactions
• Journalize adjusting entries
• Journalize closing entries

 

Cash and Banking Procedures

• Reconcile a bank statement
• Reconcile and replenish petty cash funds

 

Merchandise Inventory

• Demonstrate knowledge of merchandise inventory systems
• Prepare and analyze transactions using the perpetual method
• Prepare cost of goods sold and income statement for a merchandising company
• Prepare adjusting entries based on physical inventory
• Demonstrate knowledge of LIFO, FIFO, and weighted average methods

 

Financial Statements

• Identify the components of the four basic financial statements from an adjusted trial balance
• Prepare and analyze a balance sheet
• Prepare and analyze a cash flow statement
• Prepare and analyze a statement of equity
• Calculate and analyze financial ratios

 

Competence in Technology

• Generate and interpret spreadsheets, charts, and graphs
• Demonstrate knowledge of accounting software

 

Internal Control

• Demonstrate knowledge of internal control measures for the protection of company assets and financial records
• Understand the importance of business ethics

 

Basic Accounting Knowledge

• Exhibit understanding of terminology related to accounting
• Exhibit understanding of careers in accounting
• Exhibit understanding of cash and accrual accounting
• Exhibit understanding of regulatory bodies, such as the SEC, IRS, FASB, and IASB

 

Advanced Accounting Practices

• Differentiate between methods of business formation, such as sole proprietorship, partnership, and corporation
• Calculate the amount of uncollectable accounts through aging of accounts receivable
• Exhibit understanding of stock transaction, such as issuance, treasury stock, and various forms of dividends
• Calculate and record depreciation using straight line and accelerated methods
• Exhibit understanding of bond transactions, such as issuance, interest payments, amortization of premium or discount (using effective interest method) and redemption entries
• Understand the time value of money and application of those principles
• Prepare budget reports to make business decisions
• Determine relevant cost and revenue data for decision-making purposes
• Demonstrate knowledge of cost volume profit analysis
• Demonstrate knowledge of cost accounting systems, such as job order costing, activity based costing, and variable costing
• Demonstrate knowledge of standard costs and calculate variances
• Calculate predetermined overhead rates and over/under applied overhead
• Demonstrate knowledge of capital budgeting methods such as NPV, IRR, and payback
• Demonstrate knowledge of basic cost concepts, such as fixed, variable, and mixed costs

 

Written Assessment:

Administration Time: 3 hours 
Number of Questions: 128

Areas Covered: 

Journalizing: 14%

Cash and Banking Procedures: 8%

Merchandise Inventory: 12%

Financial Statements: 15%

Competence in Technology: 6%

Internal Control: 6%

Basic Accounting Knowledge: 12%

Advanced Accounting Practices: 27%

 

Sample Questions:

When money is received on account from a customer, the appropriate entry increases

1. revenue
2. sales
3. accounts payable
4. cash

 

A deposit in transit on a bank statement is

1. added to the checkbook balance
2. added to the bank balance
3. subtracted from the bank balance
4. subtracted from the cash account

 

A purchase of merchandise on account

1. decreases an asset
2. decreases a liability
3. increases a liability
4. increases an expense  

 

In a multi-step income statement, interest expense would be included in

1. revenue
2. cost of goods sold  
3. selling and administrative expense
4. other income and expense

 

Double ruling below a total indicates the

1. subtotal
2. net income  
3. net loss  
4. final total  

 

An actual count of merchandise is called a _____ inventory.  

1. physical
2. perpetual
3. merchandise control
4. supply

 

A cash discount entry is based on

1. invoice terms
2. vendor relationships
3. purchase volume
4. a trade reduction

A corporation pays _____ to its stockholders.  

1. earnings
2. dividends
3. contributed capital
4. paid-in capital

 

The interest on $200.00 at 6 percent for 60 days would be

1. $1.20
2. $2.00
3. $12.00
4. $120.00

 

The debt to equity ratio compares the

1. amount of liabilities to stockholders’ equity
2. amount of assets to liabilities
3. residual value of the assets to the equity
4. equity to the assets