Accounting Competency Exams

Effective with the Spring 2024 semester, any student registering for ACG 3101 Financial Accounting and Reporting 1 will need to first pass two competency exams, one in financial accounting and one in managerial accounting. Students are encouraged to review the information below carefully.

Frequently Asked Questions

Who needs to take these exams?

Any student who plans to register for ACG 3101 for the Spring 2024 semester or later. This course is required for the following students:

  • Undergraduate Accounting majors
  • Undergraduate Finance majors with a catalog year of 2018 or later. If you are unsure of your catalog year, please check with an advisor in the Heavener School of Business.
  • Undergraduate Accounting minors

Even if you are not sure of your major or minor, we recommend you take the exams at the appropriate time (see below) if you believe there’s a chance you may select one of the programs above.

Why are these exams required?

ACG 3101 is a challenging course that requires a strong foundation in accounting principles. We have found that some students can earn the required grades in introductory courses but still not understand some of the information that is important to succeed in ACG 3101. Because we want students to be successful, we have implemented this requirement to ensure all students have an equal and comprehensive understanding of accounting principles before moving on to this more advanced course.

When should I take these exams?

You are encouraged to take each exam as soon as you are eligible AND believe you have a good understanding of the topics covered. In ACG 2021 and ACG 2071 (when taken at UF), the exam topics are covered early enough in the course to permit students to pass the competency exams prior to the end of the course. When taking courses at other schools, the topics may be covered at different points in the semester, possibly at the end. See below for more information on exam topics.

Any UF student is eligible to take the exams. Transfer students will be eligible once they are formally admitted to the university.

The exams will be available in the Canvas learning management system year-round. However, be aware that if you take the exam during a university closure, the UF Help Desk (for Gatorlink/Canvas problems) and other resources will not be available.

What if I do not pass both exams?

We strongly recommend you pay close attention to the topics provided below while taking ACG 2021 and ACG 2071, and then review the topics well prior to attempting the exams. You will be given three attempts at each exam. If you do not pass an exam by the second attempt, you will be required to meet with an academic advisor prior to attempting the third exam. If you do not pass either exam by the third attempt, you will not be permitted to register for ACG 3101.

How do I sign up to take the exams?

In mid- to late-January 2023, all students enrolled in the accounting or finance majors, or the accounting minor, who have not already earned a C or better in ACG 3101, will be added to an Accounting Competency Exam site in the Canvas learning management system. The online exams will be administered within Canvas. After this initial upload, students who change into one of these programs will be added individually. Please allow 3-5 business days after your major is changed for the site to appear on your Canvas list of courses.

Will the exams be proctored?

Yes. The exams will be proctored via Honorlock, a virtual proctoring service. Access to a webcam and reliable, high-speed internet will be required. More information on using Honorlock will be available in the Canvas site.

Will there be a charge to take the exam?

No. The exams and required proctoring are offered at no cost to UF students.

I have a disability. Can I get accommodations for taking the exams?

Students with disabilities who experience learning barriers and would like to request academic accommodations should connect with the Disability Resource Center (DRC). Get started with the DRC. If approved by the DRC for accommodations, students should request accommodations for these exams by emailing John Laibson at least four business days prior to the intended exam date. If taking the exam close to the beginning of the semester in which you want to take ACG 3101, you should plan accordingly.

To receive accommodations, you must have a DRC accommodation letter that applies to the semester in which you are taking the exam, or, if in between semesters, to the semester immediately prior to or immediately following the break. For example, if taking the exam December 31, 2023, you must have an accommodation letter that applies to the Fall 2023 or Spring 2024 semester.

Will I still need to earn a B in ACG 2021 and ACG 2071?

Yes. In order to register for ACG 3101 (Spring 2024 or later), you must earn a grade of B or better in ACG 2021 and ACG 2071, and pass both Accounting Competency Exams.

Exam Topics

The following information is provided to assist you in preparing for the exams. We recommend you review the topics for each exam prior to taking it for the first time. If you are taking the exam for the second or third time, you should be reviewing even more thoroughly. If you do not pass either exam by the third attempt, you will not be permitted to register for ACG 3101.

This information is not intended to replace the instruction you receive in your introductory accounting courses. UF students admitted as freshmen are strongly encouraged to take ACG 2021 and ACG 2071 at UF. Both courses are available online and are available in the Fall, Spring, and Summer semesters. Data shows that students who take both courses at UF have a much higher chance of success in ACG 3101.

In addition to the exam topics, we have listed the textbooks we use to teach these topics at UF. We recommend referring to these textbooks if you have not learned the material well enough to pass the exams. In addition to the recommended textbooks, all UF students have access to LinkedIn Learning, where you can find courses and videos on numerous accounting topics.

Textbook: Financial Accounting; Spiceland, Thomas and Herrmann, 6th Edition. McGraw-Hill.

Topics Covered:

1. Framework of Financial Accounting

  • Purpose of financial accounting
  • Statement of cash flows: Operating, Investing, and Financing Activities
  • Measuring business activities: the basic accounting equation
  • Communicating through financial statements: four basic financial statements and links between the financial statements

2. The Accounting Cycle: During the Period

  • Transaction analysis: effects of transactions on the accounting equation
  • Debit/Credit rules and their effect on account balances
  • Journal entries: recording transactions in the journal
  • T-accounts: use of T-accounts to analyze accounts

3. The Accounting Cycle: End of the Period

  • Revenue/expense recognition principles
  • Accrual Accounting: accrued revenue and expense vs. deferred revenue and expense
  • Accrual accounting: adjusting entries

4. Receivables and Sales

  • Net revenue: recording of trade discounts, sales returns and allowances, and sales discounts
  • Estimating uncollectible accounts: allowance method of recording uncollectible accounts
  • Recording uncollectible accounts under the direct write-off method

5. Inventory and Cost of Goods Sold

  • Relationship between inventory and cost of goods sold
  • Multi-step income statement: calculation of Gross profit, operating income, income before income taxes and net income
  • Inventory cost flow assumptions: specific identification, weight-average cost, FIFO, and LIFO
  • Lower of cost and net realizable value

6. Long-term Assets

  • Asset acquisitions: determine the cost of an asset
  • Intangible assets: accounting for goodwill
  • Accounting for expenditures after acquisition of an asset
  • Depreciation of long-term assets: straight-line, double declining balance, and activity- based depreciation
  • Recording sale/disposal of a long-term asset

7. Current Liabilities

  • Apply the appropriate accounting treatment for contingencies
  • Recording of warranties

8. Investments

  • Account for investments in equity securities when the investor has insignificant influence (passive investments): Fair value method
  • Account for investments in equity securities when the investor has significant influence: Equity method
  • Account for investments in held-to-maturity debt securities

Textbook:
Introduction to Managerial Accounting, Brewer et al., 9th Edition. McGraw-Hill.

Topics Covered:

1. Cost Classification

  • Direct versus indirect costs
  • Manufacturing costs: Materials, labor, overhead
  • Product versus period costs
  • Variable costs, fixed costs, and mixed costs
  • Differential costs, sunk costs, and opportunity costs
  • Contribution margin income statement

2. Job Costing

  • Predetermined overhead rates
  • Applying overhead costs to jobs
  • Product costs using plantwide overhead rate
  • Product costs using multiple overhead rates
  • Journal entries for job costing system
  • Cost of goods manufactured and cost of goods sold
  • Underapplied or overapplied overhead costs

3. Process Costing

  • Flow of costs through a process costing system
  • Equivalent units of production
  • Cost per equivalent unit
  • Cost of units completed and cost of units in ending inventory

4. Variable and Absorption Costing

  • Product costs using variable versus absorption costing
  • Effect of costing method on operating income
  • Reconciling variable and absorption costing income

5. Cost-Volume-Profit Analysis

  • Effect of changes in costs, prices and volume on margins and income
  • Sales needed to break-even
  • Sales needed to achieve target profit
  • Margin of safety
  • Operating leverage
  • Break-even point for multiproduct company

6. Segment Reporting

  • Segmented contribution margin income statements
  • Traceable versus common fixed costs
  • Break-even points for segments

7. Operational Budgeting

  • Sales budget and expected cash collections
  • Production budgets, inventory purchases budgets, and expected cash payments
  • Labor, overhead, and selling and administrative expenses budget
  • Cash budget
  • Budgeted income statement
  • Budgeted balance sheet

8. Variance Analysis

  • Planning budget versus flexible budget
  • Revenue and spending variances
  • Materials price and quantity variances
  • Labor rate and efficiency variances
  • Variable overhead rate and efficiency variances
  • Fixed overhead budget and volume variances
  • Standard cost system for inventory

9. Performance Measurement of Segments

  • Return on investment, turnover and margin
  • Effect of changes in sales, expenses, and assets on return on investment
  • Residual income

10. Differential Analysis

  • Relevant versus irrelevant costs
  • Drop or add product line or segment
  • Make-or-buy decisions
  • Special sales order decisions
  • Product mix when resources are limited
  • Value of obtaining more of a limited resource
  • Sell or process further decisions

Contact Us

If you have questions about the exams that are not answered here, please send an email to our accounting exam inbox from your Gatorlink email address. Note that this email does not address exam topics. Resources for those have been provided above.

If you have other questions regarding your academic plan, concerns regarding your ability to enroll in ACG 3101, etc., please contact an academic advisor in your major.