ETS MAJOR FIELD COMPREHENSIVE EXAM
2026 QUESTIONS WITH SOLUTIONS GRADED
A+
◉ Financial Accounting Documents. Answer: - Income Statement and
Statement of Retained Earnings
- Balance Sheet
- Statement of Cash Flows
◉ Managerial Accounting Concepts. Answer: - Cost concepts
- Product costing systems
- Activity-based costing
- Cost, volume, profit analysis
- Budgeting
- Standar costing
- Non-routine decision making
- Relevant variable analysis
◉ Elements of Financial Statements. Answer: - Assets: Future economic
value
- Liabilities: Future economic obligations
,- Owners' equity: net assets (assets minus liabilities)
- Revenues - increase net income
- Expenses - decrease net income
◉ Revenue Recognition. Answer: Recognize revenue when EARNED
(performance) regardless of when cash is RECEIVED
◉ Matching Concept. Answer: Recognize expense when INCURRED
(used) in an attempt to generate revenue regardless of when cash is
PAID
◉ Accounts Receivable. Answer: Shown at its net realizable value
◉ Inventory. Answer: Use FIFO, LIFO, WA, and LCM
◉ Property, plant, & equipment. Answer: Shown net of depreciation
◉ Intangibles. Answer: Shown net of amortization
◉ Long-Term Debt. Answer: Shown at carrying value (face value plus
premium or less discount)
◉ Common Stock. Answer: Shown at par value
,◉ Preferred Stock. Answer: Shown at par value; preferences are for
dividends and liquidation
◉ Retained Earnings. Answer: Earnings (net income) retained (not
distributed to shareholders) by the company
◉ Elements of an Income Statement. Answer: - Sales
- Less cost of goods sold
- Gross Margin
- Less selling & administration
- Income before tax
- Less taxes (provision for taxes)
- Net income
◉ Statement of Owners' Equity. Answer: Shows changes in owners'
(shareholders') equity during the period
◉ Elements of the Statement of Owners' Equity. Answer: Retained
Earnings Portion:
- Beginning balance
- Add net income
- Subtract dividends declared
, - Equals ending balance
◉ Balance Sheet. Answer: Shows that assets= liabilities + owners'
equity
- Assets shown in order of liquidity
- Liabilities show in order that they are due
- Owners' equity shown: contributed capital; retained earnings; treasury
stock (latter subtracted)
◉ Statement of Cash Flows. Answer: Three Sections: Operating,
Investing,& Financing
◉ Statement of Cash Flows: Operating. Answer: Cash paid and received
from operating activities
◉ Statement of Cash Flows: Investing. Answer: Cash paid and received
from long-term asset activities
◉ Statement of Cash Flows: Financing. Answer: Cash paid and received
from long-term debt and owners' equity activities
◉ Cost Behavior. Answer: - Fixed: constant in total
- Variable: changes proportionately
- Mixed: has both a fixed and variable component
2026 QUESTIONS WITH SOLUTIONS GRADED
A+
◉ Financial Accounting Documents. Answer: - Income Statement and
Statement of Retained Earnings
- Balance Sheet
- Statement of Cash Flows
◉ Managerial Accounting Concepts. Answer: - Cost concepts
- Product costing systems
- Activity-based costing
- Cost, volume, profit analysis
- Budgeting
- Standar costing
- Non-routine decision making
- Relevant variable analysis
◉ Elements of Financial Statements. Answer: - Assets: Future economic
value
- Liabilities: Future economic obligations
,- Owners' equity: net assets (assets minus liabilities)
- Revenues - increase net income
- Expenses - decrease net income
◉ Revenue Recognition. Answer: Recognize revenue when EARNED
(performance) regardless of when cash is RECEIVED
◉ Matching Concept. Answer: Recognize expense when INCURRED
(used) in an attempt to generate revenue regardless of when cash is
PAID
◉ Accounts Receivable. Answer: Shown at its net realizable value
◉ Inventory. Answer: Use FIFO, LIFO, WA, and LCM
◉ Property, plant, & equipment. Answer: Shown net of depreciation
◉ Intangibles. Answer: Shown net of amortization
◉ Long-Term Debt. Answer: Shown at carrying value (face value plus
premium or less discount)
◉ Common Stock. Answer: Shown at par value
,◉ Preferred Stock. Answer: Shown at par value; preferences are for
dividends and liquidation
◉ Retained Earnings. Answer: Earnings (net income) retained (not
distributed to shareholders) by the company
◉ Elements of an Income Statement. Answer: - Sales
- Less cost of goods sold
- Gross Margin
- Less selling & administration
- Income before tax
- Less taxes (provision for taxes)
- Net income
◉ Statement of Owners' Equity. Answer: Shows changes in owners'
(shareholders') equity during the period
◉ Elements of the Statement of Owners' Equity. Answer: Retained
Earnings Portion:
- Beginning balance
- Add net income
- Subtract dividends declared
, - Equals ending balance
◉ Balance Sheet. Answer: Shows that assets= liabilities + owners'
equity
- Assets shown in order of liquidity
- Liabilities show in order that they are due
- Owners' equity shown: contributed capital; retained earnings; treasury
stock (latter subtracted)
◉ Statement of Cash Flows. Answer: Three Sections: Operating,
Investing,& Financing
◉ Statement of Cash Flows: Operating. Answer: Cash paid and received
from operating activities
◉ Statement of Cash Flows: Investing. Answer: Cash paid and received
from long-term asset activities
◉ Statement of Cash Flows: Financing. Answer: Cash paid and received
from long-term debt and owners' equity activities
◉ Cost Behavior. Answer: - Fixed: constant in total
- Variable: changes proportionately
- Mixed: has both a fixed and variable component
