Accredited Business Accountant/Advisor Exam Outline
PRACTICE 1: Financial Accounting
- Use principles of accounting to provide financial data to manage a business.
- Set up Records – Design a system for record setup to organize the financial data.
- Define Accounting Cycle – Analyze the transactions of the business using the accounting cycle to understand the proper reporting.
- Cash vs. Accrual – Determine the differences between cash and accrual accounting methods.
- Revenue Recognition – Determine when revenue is recognized and recorded.
- Recording Adjusting/Reversing Entries – Analyze transactions to prepare adjustments and reversing journal entries using accounting principles to properly report account balances.
- Prepare Accounting Worksheet – Organize adjusting and closing entries using worksheets to prepare financial statements.
- Partnerships – Analyze changes in partnership interests using accounting principles to determine partners’ capital accounts.
- Financial Statements – Identify the different reports of the business’s financial statements to analyze the business operations.
- Provide Supplemental Information – Identify additional information not reported elsewhere to give more information to the reader.
- Report Disclosures – Identify information of the business that is required to be disclosed in the financial statements to provide information to the reader.
- Categorize current assets as those used in a year or operating cycle.
- Record Property and Equipment – Identify the fixed assets of a business that should be classified as property and equipment.
- Intangible Assets – Identify the non-physical assets of a business that should be classified as intangible.
- Liabilities – Identify and classify obligations of a business to determine the amount of business debt and risk of services non-performed.
- Equity – Analyze/Measure the effect of owner investments and business operations to determine the equity investors have in the business.
- Compensation – Compute the labor expense of the business using payroll reports.
- Leases – Identify the proper classification of the business’s leases to determine if a lease should be a business expense or a fixed asset (e.g., operating lease vs. capital leases).
- Accounting for Pensions – Identify how pensions and retirement plans are accounted for on financial statements.
- Depreciation – Calculate the recovery of the cost of fixed assets using depreciation.
- Statement Analysis – Use financial statement analysis to determine business performance.
- Statements on Standards for Accounting and Review Services (SSARS) – Apply the appropriate level of SSARS financial reporting to present financial statements.
- Engagement Letters – Compose and record the agreement between the professional and the client using an engagement letter to define responsibilities.
- Basis of Accounting – Use a specific basis of accounting to determine consistent reporting.
- Work Papers – Document conclusions using source documents to support information reported in the financial statements.
- Report/Transmittals – Determine the proper accountant’s report to include with financial statements using the report that defines the accountant’s level of service.
PRACTICE 2: Business Consulting, Taxation, Business Law, Ethics
- Cost-Volume-Profit – Analyze sales volume and costs to make business decisions.
- Department Analysis – Calculate departmental performance.
- Time Value of Money – Calculate the value of a single sum or a series of sums to measure present and future value.
- Capital Budgeting/Capital Investment – Compute return on investment to determine the value of a long-term investment.
- Budgets/Cash Budget – Prepare a projected statement of revenues and expenses using estimates and knowledge of the business to plan activities for the year.
- Internal Control – Evaluate operating procedures using management’s policies to discourage fraud and encourage compliance with applicable laws and regulations.
- Employee Benefits – Define indirect compensation.
- Managerial Decisions – Define the problem, identify alternative solutions, select the best alternative, and monitor the results.
- Individual Tax Returns (1040) – Collect information from the taxpayer using data to prepare a complete and accurate return.
- Determine the appropriate filing status of taxpayers through inquiry.
- Report all income received except items specifically excluded from tax by law.
- Determine deductions to be subtracted from income to arrive at adjusted gross income.
- Determine whether to use the standard deduction or itemized deductions to calculate the lowest taxable income.
- Determine the taxpayer’s taxable income by subtracting deductions and exemptions from adjusted gross income.
- Determine if the taxpayer is subject to alternative minimum tax (AMT) or excess premium tax credit repayment.
- Determine reductions to income tax by using tax credits to reduce the taxpayer’s tax liability (e.g. foreign tax credit, child and dependent care, education, retirement savings, child tax credit, energy credits).
- Determine additional taxes to complete calculating the proper income tax liability (e.g., self-employment tax, unreported Social Security and Medicare tax, additional retirement tax, household employment tax, first-time home buyer credit repayment, net investment income tax, shared responsibility payment).
- Apply payments and refundable credits to tax liability to calculate total payments.
- Specialty Topics – Review unusual topics to determine how they affect tax returns.
- Partnerships (1065) – Collect information from the taxpayer to prepare a complete and accurate partnership return.
- S Corporations (1120S) – Collect information from the taxpayer to prepare a complete and accurate S corporation return.
- Limited Liability Companies/Disregarded Entities –Determine the best method of reporting client income and expenses for limited liability companies and disregarded entities.
- Corporations (1120) – Collect information from the taxpayer to prepare a complete and accurate corporate return.
- Trust and Estates Income Tax (1041) – Collect information from the taxpayer to prepare a complete and accurate fiduciary return.
- Federal Estate Tax Return (706) – Collect information from the taxpayer to prepare a complete and accurate estate return.
- Federal Gift Tax Return (709) – Collect information from the taxpayer to prepare a complete and accurate gift tax return.
- Not-for-profit Issues (990) – Collect information from the taxpayer to prepare a complete and accurate nonprofit return.
- Recognize different forms of business and business transactions to advise clients (e.g., partnership, corporation, trust, limited liability company).
- Determine best practices and procedures for accounting and tax professionals.
Please note that this outline is simply a list of topics you will most likely encounter on the exam. This does not necessarily correspond to the table of contents for the ACAT Prep Course offered by the National Society of Accountants.