TExES Business and Finance 6-12 (276) Secrets Study Guide With Exam
Questions And Correct Answers With Rationales.
TExES Business and Finance 6–12 (276) – Practice Module
Questions 1–30
Q1.
Which of the following is a primary function of financial accounting?
A. Planning production schedules
B. Recording, summarizing, and reporting financial transactions
C. Marketing products to customers
D. Evaluating employee performance
Rationale:
Financial accounting focuses on documenting business transactions and reporting them in financial
statements for external users.
Q2.
Which financial statement shows a company’s financial position at a specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Retained earnings statement
Rationale:
The balance sheet lists assets, liabilities, and equity at a specific date.
Q3.
Which of the following best defines liquidity?
A. Ability to generate revenue
B. Ability to convert assets into cash quickly
C. Long-term solvency
D. Net income after expenses
Rationale:
Liquidity measures how easily assets can be converted to cash to meet short-term obligations.
,Q4.
Which type of business ownership allows shareholders to limit personal liability?
A. Sole proprietorship
B. Partnership
C. Corporation
D. Cooperative
Rationale:
A corporation is a separate legal entity, protecting shareholders’ personal assets.
Q5.
Which accounting principle dictates that revenue is recognized when earned, regardless of when
cash is received?
A. Matching principle
B. Conservatism principle
C. Revenue recognition principle
D. Cost principle
Rationale:
Revenue is recorded when earned, not necessarily when cash is received, per the revenue
recognition principle.
Q6.
Which of the following is considered a current asset?
A. Building
B. Equipment
C. Accounts receivable
D. Long-term bonds
Rationale:
Current assets are expected to be converted into cash within one year; accounts receivable is
included.
Q7.
Which financial ratio measures a company’s profitability?
A. Current ratio
B. Debt-to-equity ratio
C. Return on equity (ROE)
D. Quick ratio
, Rationale:
ROE evaluates profitability by comparing net income to shareholders’ equity.
Q8.
Which of the following is a primary function of marketing?
A. Payroll management
B. Promoting and selling products or services
C. Recording financial transactions
D. Manufacturing
Rationale:
Marketing focuses on creating demand and communicating value to customers.
Q9.
Which of the following represents a fixed cost?
A. Direct materials
B. Hourly wages
C. Rent for factory building
D. Sales commission
Rationale:
Fixed costs remain constant regardless of production level, like rent.
Q10.
Which type of business analysis evaluates whether a business can cover its fixed and variable costs?
A. SWOT analysis
B. PESTLE analysis
C. Break-even analysis
D. Ratio analysis
Rationale:
Break-even analysis determines the sales volume needed to cover costs.
Q11.
Which of the following best defines gross profit?
A. Revenue minus all expenses
B. Revenue minus operating expenses
C. Revenue minus cost of goods sold (COGS)
D. Net income minus taxes
Questions And Correct Answers With Rationales.
TExES Business and Finance 6–12 (276) – Practice Module
Questions 1–30
Q1.
Which of the following is a primary function of financial accounting?
A. Planning production schedules
B. Recording, summarizing, and reporting financial transactions
C. Marketing products to customers
D. Evaluating employee performance
Rationale:
Financial accounting focuses on documenting business transactions and reporting them in financial
statements for external users.
Q2.
Which financial statement shows a company’s financial position at a specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Retained earnings statement
Rationale:
The balance sheet lists assets, liabilities, and equity at a specific date.
Q3.
Which of the following best defines liquidity?
A. Ability to generate revenue
B. Ability to convert assets into cash quickly
C. Long-term solvency
D. Net income after expenses
Rationale:
Liquidity measures how easily assets can be converted to cash to meet short-term obligations.
,Q4.
Which type of business ownership allows shareholders to limit personal liability?
A. Sole proprietorship
B. Partnership
C. Corporation
D. Cooperative
Rationale:
A corporation is a separate legal entity, protecting shareholders’ personal assets.
Q5.
Which accounting principle dictates that revenue is recognized when earned, regardless of when
cash is received?
A. Matching principle
B. Conservatism principle
C. Revenue recognition principle
D. Cost principle
Rationale:
Revenue is recorded when earned, not necessarily when cash is received, per the revenue
recognition principle.
Q6.
Which of the following is considered a current asset?
A. Building
B. Equipment
C. Accounts receivable
D. Long-term bonds
Rationale:
Current assets are expected to be converted into cash within one year; accounts receivable is
included.
Q7.
Which financial ratio measures a company’s profitability?
A. Current ratio
B. Debt-to-equity ratio
C. Return on equity (ROE)
D. Quick ratio
, Rationale:
ROE evaluates profitability by comparing net income to shareholders’ equity.
Q8.
Which of the following is a primary function of marketing?
A. Payroll management
B. Promoting and selling products or services
C. Recording financial transactions
D. Manufacturing
Rationale:
Marketing focuses on creating demand and communicating value to customers.
Q9.
Which of the following represents a fixed cost?
A. Direct materials
B. Hourly wages
C. Rent for factory building
D. Sales commission
Rationale:
Fixed costs remain constant regardless of production level, like rent.
Q10.
Which type of business analysis evaluates whether a business can cover its fixed and variable costs?
A. SWOT analysis
B. PESTLE analysis
C. Break-even analysis
D. Ratio analysis
Rationale:
Break-even analysis determines the sales volume needed to cover costs.
Q11.
Which of the following best defines gross profit?
A. Revenue minus all expenses
B. Revenue minus operating expenses
C. Revenue minus cost of goods sold (COGS)
D. Net income minus taxes
