ETS MAJOR FIELD TEST IN BUSINESS – PRACTICE
EXAMINATION COMPLETE 200+ QUESTIONS WITH
100% VERIFIED ANSWERS
Subjects Covered: Accounting, Economics, Finance, Law, Management, Marketing,
MIS, Statistics
ACCOUNTING (Questions 1–40)
1. What costs should be considered when making non-routine decisions? (Select
three)
A. The price of material, factory overhead costs, and the price of labor
B. Sunk costs, historical costs, and allocated costs
C. Fixed costs, variable costs, and mixed costs
D. Direct materials, indirect labor, and administrative expenses
Correct Answer: A
2. Total product divided by units produced and sold equals:
A. Total manufacturing cost
B. Product cost per unit
C. Cost of goods sold
D. Contribution margin per unit
Correct Answer: B
3. What is the best description of the contribution margin?
A. Total sales minus fixed costs
B. The difference between variable costs subtracted from sales
C. Net income plus variable costs
D. Sales minus cost of goods sold
,Correct Answer: B
4. In a continuous budget plan, how many months are generally planned?
A. 6 months
B. 12 months
C. 18 months
D. 24 months
Correct Answer: B
5. Which of the following is NOT one of the weaknesses of standard costing?
A. It may become outdated quickly
B. It can lead to ignoring non-financial measures
C. It makes accounting for price increases more accurate
D. It may not reflect current production realities
Correct Answer: C
6. What are the potential ways to find the price a produced product should cost?
(Select three)
A. Product cost concept, total cost concept, and variable cost concept
B. Historical cost, replacement cost, and opportunity cost
C. Marginal cost, average cost, and fixed cost
D. Direct cost, indirect cost, and period cost
Correct Answer: A
7. Which report serves as the connecting link between the income statement
and the balance sheet?
A. Statement of retained earnings
B. Cash flow statement
C. Trial balance
D. Notes to the financial statements
Correct Answer: B
8. The net cash flow from operating activities normally differs from the amount
of net income for the period.
,A. True
B. False
Correct Answer: A
9. Expense accounts would normally have a balance on which side?
A. Left side (debit)
B. Right side (credit)
C. Neither side
D. Both sides
Correct Answer: A
10. A profit-making business operating as a separate legal entity in which
ownership is divided into shares of stock is known as a:
A. Sole proprietorship
B. Partnership
C. Corporation
D. Limited liability company
Correct Answer: C
11. A debt may cause a:
A. Decrease in a liability account
B. Slight increase in an asset account
C. Decrease in an equity account
D. Permanent decrease in revenue
Correct Answer: B
12. Which of the following would be classified as a current asset on the balance
sheet?
A. Buildings
B. Accounts receivable
C. Patents
D. Long-term investments
Correct Answer: B
, 13. What are the three elements of internal control?
A. Risk assessment, information systems, and bonding
B. Control environment, monitoring, and control procedures
C. Segregation of duties, authorization, and documentation
D. Physical controls, independent review, and employee training
Correct Answer: B
14. A cash distribution of earnings by a corporation to its stockholders is called a
cash dividend. The three conditions a corporation must meet to pay a cash
dividend are: sufficient retained earnings, sufficient cash, and formal action by
the board of directors.
A. True
B. False
Correct Answer: A
15. What are the factors in computing depreciation?
A. Initial cost + residual value = depreciable
B. Initial cost - residual value = depreciable cost
C. Initial cost × useful life = depreciable base
D. Residual value ÷ useful life = annual depreciation
Correct Answer: B
16. The statement of cash flows reports a firm's major cash inflows and outflows
for a period. It provides useful information about a company's ability to: (Select
three)
A. Meet its financial obligations
B. Generate cash from operations
C. Maintain and expand its operating capacity
D. Calculate the price-to-earnings ratio
Correct Answer: A, B, C
17. Notes receivables are amounts that customers owe for which a formal,
written instrument of credit has been issued. If longer than a year, it is
EXAMINATION COMPLETE 200+ QUESTIONS WITH
100% VERIFIED ANSWERS
Subjects Covered: Accounting, Economics, Finance, Law, Management, Marketing,
MIS, Statistics
ACCOUNTING (Questions 1–40)
1. What costs should be considered when making non-routine decisions? (Select
three)
A. The price of material, factory overhead costs, and the price of labor
B. Sunk costs, historical costs, and allocated costs
C. Fixed costs, variable costs, and mixed costs
D. Direct materials, indirect labor, and administrative expenses
Correct Answer: A
2. Total product divided by units produced and sold equals:
A. Total manufacturing cost
B. Product cost per unit
C. Cost of goods sold
D. Contribution margin per unit
Correct Answer: B
3. What is the best description of the contribution margin?
A. Total sales minus fixed costs
B. The difference between variable costs subtracted from sales
C. Net income plus variable costs
D. Sales minus cost of goods sold
,Correct Answer: B
4. In a continuous budget plan, how many months are generally planned?
A. 6 months
B. 12 months
C. 18 months
D. 24 months
Correct Answer: B
5. Which of the following is NOT one of the weaknesses of standard costing?
A. It may become outdated quickly
B. It can lead to ignoring non-financial measures
C. It makes accounting for price increases more accurate
D. It may not reflect current production realities
Correct Answer: C
6. What are the potential ways to find the price a produced product should cost?
(Select three)
A. Product cost concept, total cost concept, and variable cost concept
B. Historical cost, replacement cost, and opportunity cost
C. Marginal cost, average cost, and fixed cost
D. Direct cost, indirect cost, and period cost
Correct Answer: A
7. Which report serves as the connecting link between the income statement
and the balance sheet?
A. Statement of retained earnings
B. Cash flow statement
C. Trial balance
D. Notes to the financial statements
Correct Answer: B
8. The net cash flow from operating activities normally differs from the amount
of net income for the period.
,A. True
B. False
Correct Answer: A
9. Expense accounts would normally have a balance on which side?
A. Left side (debit)
B. Right side (credit)
C. Neither side
D. Both sides
Correct Answer: A
10. A profit-making business operating as a separate legal entity in which
ownership is divided into shares of stock is known as a:
A. Sole proprietorship
B. Partnership
C. Corporation
D. Limited liability company
Correct Answer: C
11. A debt may cause a:
A. Decrease in a liability account
B. Slight increase in an asset account
C. Decrease in an equity account
D. Permanent decrease in revenue
Correct Answer: B
12. Which of the following would be classified as a current asset on the balance
sheet?
A. Buildings
B. Accounts receivable
C. Patents
D. Long-term investments
Correct Answer: B
, 13. What are the three elements of internal control?
A. Risk assessment, information systems, and bonding
B. Control environment, monitoring, and control procedures
C. Segregation of duties, authorization, and documentation
D. Physical controls, independent review, and employee training
Correct Answer: B
14. A cash distribution of earnings by a corporation to its stockholders is called a
cash dividend. The three conditions a corporation must meet to pay a cash
dividend are: sufficient retained earnings, sufficient cash, and formal action by
the board of directors.
A. True
B. False
Correct Answer: A
15. What are the factors in computing depreciation?
A. Initial cost + residual value = depreciable
B. Initial cost - residual value = depreciable cost
C. Initial cost × useful life = depreciable base
D. Residual value ÷ useful life = annual depreciation
Correct Answer: B
16. The statement of cash flows reports a firm's major cash inflows and outflows
for a period. It provides useful information about a company's ability to: (Select
three)
A. Meet its financial obligations
B. Generate cash from operations
C. Maintain and expand its operating capacity
D. Calculate the price-to-earnings ratio
Correct Answer: A, B, C
17. Notes receivables are amounts that customers owe for which a formal,
written instrument of credit has been issued. If longer than a year, it is
