Pre-Requisite for ACCT 301

KAT301 - Pre-requisite for enrollment in ACCT301

Intermediate Accounting I (ACCT 301)

Foundational Financial Accounting Knowledge Assessment Tool (KAT301)

Students wishing to enroll in ACCT 301 MUST pass a test of their knowledge of financial accounting. Students will have the opportunity to take the test prior to each semester The following provides a brief FAQ on the KAT301 and a more detailed description of the rationale for the test, details on administration of the test, the knowledge assessed and resources available for students preparing for the test.

KAT301 Frequently Asked Questions

Why do I have to pass the KAT301 before enrolling in ACCT 301 at CSUSM?
KAT301 is a pre-requisite for ACCT301. Intermediate Accounting I (ACCT301) is a very demanding course. The accounting faculty introduced the pre-requisite as they found that students without strong foundational financial accounting knowledge frequently do not pass the course.
If I passed the KAT301 in previous semesters, do I need to pass the test again?
Yes. It is important that your foundational financial accounting knowledge is current.
When can I sit for the KAT301?
The Department of Accounting will offer a number of test dates on campus prior to each fall and spring semester.
How do I register to sit for the KAT301?
Each student wishing to sit for the test will register at the Accounting Department - KAT301 Information Cougar Courses site at http://community.csusm.edu. Look under Courses - Divisions and Departments - College of Business Administration. The enrollment key for currently enrolled CSUSM students is "Goodwill". The enrollment key for currently enrolled students transferring to CSUSM students is "Transfer" (do not type in the quotation mark). Students must complete a small survey of past accounting courses taken before registering for a test date. Only students registered at the Cougar Courses site will be able to sit for the test on any specific date. Walk-ins will not be able to sit for the test.
What is the format of the KAT301?
The KAT301 consists of approximately 40-50 conceptual and computational multiple-choice questions covering a number of financial accounting topics. The list of topics covered is provided in the Content of KAT301 section provided below. Students will have 75 minutes to complete the test. To pass the KAT301, students must earn a score of 70% or greater.
When will I receive the results of the test?
Students will be able to review the percentage earned through the Department of Accounting - KAT301 Information Cougar Courses site Gradebook.
How many times can I take the KAT301?
Students will be able to take the KAT301 up to three times before enrollment in each
semester. Once you have passed the KAT 301 exam for an upcoming semester, you will not be able to take it again for that semester.
How frequently can I take the test?
Students cannot take the test more than once within a seven-day period.
Can I take the KAT301 at the CSUSM Office of Disable Students Services (DSS) Testing Center?
Yes. Reasonable accommodations will be provided to qualified students with documented disabilities taking the KAT 301 Exam. Students will need to register for the KAT 301 Exam and contact the Disability Support Services (DSS) Office as well. DSS is located in Craven Hall 4200 and you can reach them by email at dss@csusm.edu It would be best include KAT 301 and Special Accommodations in the subject line in any sent emails to DSS. Students wishing to take the KAT 301 Exam in DSS are responsible for completing the required paperwork with DSS and the Department of Accounting. Note: Students scheduling the KAT 301 Exam at DSS must take it at the same day/time as the non-DSS students.

Background

Intermediate Accounting I is an important and demanding foundational course for all accounting majors. Across U.S. accounting programs, students find the adjustment to the rigor of Intermediate Accounting a stressful and challenging experience. In many universities the failure rate in this class can range from 30-50%. Success in Intermediate Accounting I (and subsequently Intermediate Accounting II) requires a strong foundational understanding and competency in financial accounting theory, concepts and techniques covered in introductory or principles of financial accounting classes. Without this strong foundational knowledge and a significant time commitment to the course, students are setting themselves up for failure. Successful completion of the course results in development of study habits and the foundational knowledge vital to the remaining accounting courses, certification exams and a rewarding career in the accounting profession. The importance of this course for accounting majors is why many accounting professionals look for the grade in Intermediate I when considering what students to hire in their business organization. Given the importance of this course and the growing restrictions on funding of accounting education, many accounting programs have instituted limits on the number of times accounting students can fail the course before admission as an accounting major and/or entrance exams for enrollment in the Intermediate Accounting I course. A few years ago CSUSM introduced such a restriction; students admitted to the accounting option must pass Intermediate Accounting I (ACCT 301) on or before the third attempt (including withdrawals). The Department of Accounting now requires students enrolled in ACCT 301 to pass an assessment of their knowledge of financial accounting theory, concepts and techniques covered in introductory or principles of financial accounting classes. Academic research and anecdotal evidence indicates a strong relationship between the level of this knowledge and student success in the Intermediate Accounting I class. 

Content of KAT301

KAT301 will test student knowledge of the following financial accounting theory, concepts and techniques:

  • Explain what accounting is.
  • Identify the users and uses of accounting. 
  • Explain the following assumptions: monetary unit, economic entity, going concern, and time period/periodicity.
  • Explain the following principles: cost, matching, revenue recognition and materiality
  • State the accounting equation and define its components.
  • Analyze the effects of business transactions on the accounting equation.
  • Understand the four financial statements and how they are prepared.
  • Explain what an account is and how it helps in the recording process.
  • Define debits and credits and explain their use in recording business transactions.
  • Identify the basic steps in the recording process.
  • Explain what a journal is and how it helps in the recording process.
  • Explain what a ledger is and how it helps in the recording process.
  • Explain what posting is and how it helps in the recording process.
  • Prepare a trial balance and explain its purpose.
  • Explain the accrual and cash approaches to accounting.
  • Explain the reasons for adjusting entries. 
  • Identify the major types of adjusting entries. 
  • Prepare adjusting entries for deferrals. 
  • Prepare adjusting entries for accruals. 
  • Describe the nature and purpose of an adjusted trial balance. 
  • Explain the process of closing the books.
  • Describe the content and purpose of a post-closing trial balance.
  • State the required steps in the accounting cycle.
  • Identify the sections of a classified statement of financial position.
  • Identify the differences between service and merchandising companies.
  • Explain the recording of purchases under a perpetual inventory system.
  • Explain the steps in the accounting cycle for a merchandising company.
  • Prepare an income statement for a merchandiser.
  • Explain the computation and importance of gross profit.
  • Describe the steps in determining inventory quantities.
  • Explain the accounting for inventories and apply the inventory cost flow methods.
  • Indicate the effects of inventory errors on the financial statements. 
  • Define fraud and internal control.
  • Identify the principles of internal control activities.
  • Indicate the control features of a bank account.
  • Prepare a bank reconciliation.
  • Explain the reporting of cash.
  • Identify the different types of receivables.
  • Explain how companies recognize accounts receivable.
  • Distinguish between the methods and bases companies use to value accounts receivable.
  • Describe the entries to record the disposition of accounts receivable.
  • Explain how companies recognize notes receivable.
  • Explain the statement presentation and analysis of receivables.
  • Describe how the cost principle applies to plant assets.
  • Explain the concept of depreciation.
  • Compute periodic depreciation using different methods.
  • Distinguish between revenue and capital expenditures and explain entries for each.
  • Explain how to account for the disposal of a plant asset.
  • Explain the basic issues related to accounting for intangible assets.
  • Indicate how plant assets and intangible assets are reported. 
  • Explain a current liability and identify the major types of current liabilities.
  • Describe the accounting for notes payable.
  • Explain the accounting for other current liabilities.
  • Explain why bonds are issued and identify the types of bonds.
  • Prepare the entries for the issuance of bonds.
  • Describe the accounting for long-term notes payable.
  • Identify the methods for the presentation of non-current liabilities. 
  • Identify the major characteristics of a corporation.
  • Record the issuance of ordinary shares.
  • Explain the accounting for treasury shares.
  • Differentiate preference shares from ordinary shares. 
  • Prepare the entries for cash dividends. 
  • Identify the items that are reported in a retained earnings statement.
  • Indicate the usefulness of the statement of cash flows.
  • Distinguish among operating, investing and finance activities

Study Resources Available to Students

Students are recommended to review the material covered in their introductory/principles financial accounting course. A variety of introductory financial accounting textbooks (approximate 15 books) are on reserve at the CSUSM library for up to 72 hours checkout.