ETS MFT BUSINESS EXAM VERSION 2
COMPLETE QUESTIONS AND DETAILED SOLUTIONS
LATEST UPDATE THIS YEAR JUST RELEASED
Question 1: (method used to account for inventory. cost of the
most recent products purchased (or produced) are the first to be
expensed as cost of goods sold (COGS), which means the lower
cost of older products will be reported as inventory) ___________ is
an asset-management and valuation method in which assets
produced or acquired first are sold, used, or disposed of first. Also,
provides a better indication of the value of ending inventory (on the
balance sheet), but it also increases net income because inventory
that might be several years old is used to value COGS. Increasing
net income sounds good, but it can increase the taxes that a
company must pay.
A. FIFO (First In, First Out)
B. LIFO (Last In, First Out)
C. Weighted Average
D. Standard Cost
Answer:
a. FIFO
Question 2: ____________not a good indicator of ending inventory
value because it may understate the value of inventory. __________
results in lower net income (and taxes) because COGS is higher.
However, there are fewer inventory write-downs under _________
during inflation.
A. FIFO (First In, First Out)
B. LIFO (Last In, First Out)
C. Average Costing/Weighted Average
, D. Standard Cost
Answer:
b. LIFO
Question 3: ________________ assigns a cost to inventory items
based on the total cost of goods purchased or produced in a period
divided by the total number of items purchased or produced.
A. FIFO (First In, First Out)
B. LIFO (Last In, First Out)
C. Average Costing/Weighted Average
D. Standard Cost
Answer:
C. Average Costing/Weighted Average
Question 4: _______________ the practice of substituting an
expected cost for an actual cost in the accounting records.
Subsequently, variances are recorded to show the difference
between the expected and actual costs.
A. FIFO (First In, First Out)
B. LIFO (Last In, First Out)
C. Average Costing/Weighted Average
D. Standard Cost
Answer:
d. Standard Costing
Question 5: In the statement of cash flows, the section for cash
flows from operating activities will include which of the following?
A. dividends paid
, B. issuance of common stock
C. decrease in accounts payable
D. purchase of a building financed entirely by a mortgage
Answer:
c. decrease in accounts payable
Question 6: ________________ measures how well a company
generates cash to pay its debt obligations, fund its operating
expenses, and fund investments.
A. financial statements
B. cash flow statement (CFS)
C. income statements
D. balance sheet
Answer:
b. cash flow statement (CFS)
Question 7: ________________is a financial statement that reports
a company's assets, liabilities, and shareholders' equity at a
specific point in time, and provides a basis for computing rates of
return and evaluating its capital structure. It provides a snapshot of
what a company owns and owes, as well as the amount invested by
shareholders.
A. balance statements
B. cash flow statement (CFS)
C. income statements
D. balance sheet
Answer:
d. Balance Sheet
COMPLETE QUESTIONS AND DETAILED SOLUTIONS
LATEST UPDATE THIS YEAR JUST RELEASED
Question 1: (method used to account for inventory. cost of the
most recent products purchased (or produced) are the first to be
expensed as cost of goods sold (COGS), which means the lower
cost of older products will be reported as inventory) ___________ is
an asset-management and valuation method in which assets
produced or acquired first are sold, used, or disposed of first. Also,
provides a better indication of the value of ending inventory (on the
balance sheet), but it also increases net income because inventory
that might be several years old is used to value COGS. Increasing
net income sounds good, but it can increase the taxes that a
company must pay.
A. FIFO (First In, First Out)
B. LIFO (Last In, First Out)
C. Weighted Average
D. Standard Cost
Answer:
a. FIFO
Question 2: ____________not a good indicator of ending inventory
value because it may understate the value of inventory. __________
results in lower net income (and taxes) because COGS is higher.
However, there are fewer inventory write-downs under _________
during inflation.
A. FIFO (First In, First Out)
B. LIFO (Last In, First Out)
C. Average Costing/Weighted Average
, D. Standard Cost
Answer:
b. LIFO
Question 3: ________________ assigns a cost to inventory items
based on the total cost of goods purchased or produced in a period
divided by the total number of items purchased or produced.
A. FIFO (First In, First Out)
B. LIFO (Last In, First Out)
C. Average Costing/Weighted Average
D. Standard Cost
Answer:
C. Average Costing/Weighted Average
Question 4: _______________ the practice of substituting an
expected cost for an actual cost in the accounting records.
Subsequently, variances are recorded to show the difference
between the expected and actual costs.
A. FIFO (First In, First Out)
B. LIFO (Last In, First Out)
C. Average Costing/Weighted Average
D. Standard Cost
Answer:
d. Standard Costing
Question 5: In the statement of cash flows, the section for cash
flows from operating activities will include which of the following?
A. dividends paid
, B. issuance of common stock
C. decrease in accounts payable
D. purchase of a building financed entirely by a mortgage
Answer:
c. decrease in accounts payable
Question 6: ________________ measures how well a company
generates cash to pay its debt obligations, fund its operating
expenses, and fund investments.
A. financial statements
B. cash flow statement (CFS)
C. income statements
D. balance sheet
Answer:
b. cash flow statement (CFS)
Question 7: ________________is a financial statement that reports
a company's assets, liabilities, and shareholders' equity at a
specific point in time, and provides a basis for computing rates of
return and evaluating its capital structure. It provides a snapshot of
what a company owns and owes, as well as the amount invested by
shareholders.
A. balance statements
B. cash flow statement (CFS)
C. income statements
D. balance sheet
Answer:
d. Balance Sheet
