1|Page
ETS MFT Business Exam Version 2 Study Guide 2025 | Major Field
Test in Business Practice Questions, Answers, and Explanations
Ace your ETS MFT Business Exam Version 2 (2025) with this comprehensive study guide.
Includes updated practice questions covering accounting, finance, marketing, management,
economics, quantitative analysis, and business ethics. Designed to match the ETS MFT Business
Version 2 format with full explanations and test strategies.
• ETS MFT Business Exam Version 2
• Major Field Test in Business 2025
• ETS MFT Business study guide PDF
•
________________ 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
_______________ 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.
,2|Page
a. FIFO (First In, First Out)
b. LIFO (Last In, First Out)
c. Average Costing/Weighted Average
d. Standard Cost - ANSWER-d. Standard Costing
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
In a period of rising prices, which inventory valuation method would generally yield both the lowest
ending inventory value and net income figure?
a. FIFO (First In, First Out)
b. LIFO (Last In, First Out)
c. Weighted Average
d. Standard Cost - ANSWER-b. LIFO
(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)
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b. LIFO (Last In, First Out)
c. Weighted Average
d. Standard Cost - ANSWER-a. FIFO
____________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
________________ 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)
________________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
ETS MFT Business Exam Version 2 Study Guide 2025 | Major Field
Test in Business Practice Questions, Answers, and Explanations
Ace your ETS MFT Business Exam Version 2 (2025) with this comprehensive study guide.
Includes updated practice questions covering accounting, finance, marketing, management,
economics, quantitative analysis, and business ethics. Designed to match the ETS MFT Business
Version 2 format with full explanations and test strategies.
• ETS MFT Business Exam Version 2
• Major Field Test in Business 2025
• ETS MFT Business study guide PDF
•
________________ 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
_______________ 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.
,2|Page
a. FIFO (First In, First Out)
b. LIFO (Last In, First Out)
c. Average Costing/Weighted Average
d. Standard Cost - ANSWER-d. Standard Costing
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
In a period of rising prices, which inventory valuation method would generally yield both the lowest
ending inventory value and net income figure?
a. FIFO (First In, First Out)
b. LIFO (Last In, First Out)
c. Weighted Average
d. Standard Cost - ANSWER-b. LIFO
(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)
, 3|Page
b. LIFO (Last In, First Out)
c. Weighted Average
d. Standard Cost - ANSWER-a. FIFO
____________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
________________ 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)
________________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
