age 1 of 61
MAJOR FIELD TEST BUSINESS STUDY GUIDE 2025/2026
ACCURATE QUESTIONS AND VERIFIED CORRECT
SOLUTIONS WITH RATIONALES || 100%
GUARANTEED PASS <RECENT VERSION>
Balance Sheet ......ANSWER........Attempts to describe the
financial condition of the firm at a point in time.
Includes: Assets, Liabilities, & Equity - "net assets" what remains
after deducting liabilities from assets..
Income Statement ......ANSWER........Presents the results of the
operations of an entity over a peroid of time.
Includes: Revenues, Expenses, Income, Gains & Losses
,age 2 of 61
Statement of Equity or Statement of Retained Earnings (Capital)
......ANSWER........Bridges the gap between the income statement
and the balance sheet.
Arrangement depends on type of organization:
Proprietorship: Statement of Owners Equity
Partnership: Statement of Partners Equity
Corporation: Statement of Stockholders Equity
In addition, it contains: Investments by Owners and Distribution to
owners
Statement of Cash Flows ......ANSWER........Provides information
about a company's cash receipts and cash payments during a
specific period of time.
,age 3 of 61
Includes all 10 elements of financial statements: assets, liabilities,
equity, net income, income, gains, losses, Statement of 'X' Equity,
Investments by Owners, Distributions to Owners.
Cash Basis Accounting ......ANSWER........Revenue is recognized in
the accounting period in which the associated cash is received
and Expenses are recognized in the accounting period that the
cash is paid.
Accrual Basis Accounting ......ANSWER........Revenue is recognized
in the accounting period in which the revenue is earned,
regardless of when the associated revenue is received.
(Recorded when the sale is made, not when it is paid for.)
Depreciation ......ANSWER........A method of allocating the cost of
a tangible asset over its useful life. Businesses depreciate long-
term assets for both tax and accounting purposes.
, age 4 of 61
Straight-Line Deprecation ......ANSWER........Straight Line
Depreciation - (estimated value/useful life)
Equal amounts of depreciation expense are recorded in each
period of the useful life of the asset, if not disposed of prior to
the end of estimated useful life.
The value is divided among estimated life of item.
Double Declining Balance Depreciation ......ANSWER........Double
Declining Balance
An "accelerated" depreciation method (more expense is
recorded in the early periods of useful life and less in the later
periods.)
Basic Inventory Equation for Goods ......ANSWER........Beginning
Inventory + Purchases = Goods
MAJOR FIELD TEST BUSINESS STUDY GUIDE 2025/2026
ACCURATE QUESTIONS AND VERIFIED CORRECT
SOLUTIONS WITH RATIONALES || 100%
GUARANTEED PASS <RECENT VERSION>
Balance Sheet ......ANSWER........Attempts to describe the
financial condition of the firm at a point in time.
Includes: Assets, Liabilities, & Equity - "net assets" what remains
after deducting liabilities from assets..
Income Statement ......ANSWER........Presents the results of the
operations of an entity over a peroid of time.
Includes: Revenues, Expenses, Income, Gains & Losses
,age 2 of 61
Statement of Equity or Statement of Retained Earnings (Capital)
......ANSWER........Bridges the gap between the income statement
and the balance sheet.
Arrangement depends on type of organization:
Proprietorship: Statement of Owners Equity
Partnership: Statement of Partners Equity
Corporation: Statement of Stockholders Equity
In addition, it contains: Investments by Owners and Distribution to
owners
Statement of Cash Flows ......ANSWER........Provides information
about a company's cash receipts and cash payments during a
specific period of time.
,age 3 of 61
Includes all 10 elements of financial statements: assets, liabilities,
equity, net income, income, gains, losses, Statement of 'X' Equity,
Investments by Owners, Distributions to Owners.
Cash Basis Accounting ......ANSWER........Revenue is recognized in
the accounting period in which the associated cash is received
and Expenses are recognized in the accounting period that the
cash is paid.
Accrual Basis Accounting ......ANSWER........Revenue is recognized
in the accounting period in which the revenue is earned,
regardless of when the associated revenue is received.
(Recorded when the sale is made, not when it is paid for.)
Depreciation ......ANSWER........A method of allocating the cost of
a tangible asset over its useful life. Businesses depreciate long-
term assets for both tax and accounting purposes.
, age 4 of 61
Straight-Line Deprecation ......ANSWER........Straight Line
Depreciation - (estimated value/useful life)
Equal amounts of depreciation expense are recorded in each
period of the useful life of the asset, if not disposed of prior to
the end of estimated useful life.
The value is divided among estimated life of item.
Double Declining Balance Depreciation ......ANSWER........Double
Declining Balance
An "accelerated" depreciation method (more expense is
recorded in the early periods of useful life and less in the later
periods.)
Basic Inventory Equation for Goods ......ANSWER........Beginning
Inventory + Purchases = Goods
