Major Field Test Business Study Set
Premium 2026–2027 Exam Study Guide:
Updated Questions, Fully Explained
Solutions, Concept Reinforcement &
Strategic Revision Support
Description
The Premium 2026–2027 Exam Study Guide
is a carefully developed resource designed to
support students in achieving stronger exam
performance through structured practice, clear
explanations, and focused revision
techniques.
This guide provides more than just practice
material—it offers a guided learning
approach that helps you understand key
concepts, apply them correctly, and improve
your ability to handle exam questions with
confidence. By combining updated
questions with well-
,Balance Sheet - ANSWER✅Attempts to describe the financial condition of the firm at a
point in time.
Includes: Assets, Liabilities, & Equity - "net assets" what remains after deducting
liabilities from assets..
Income Statement - ANSWER✅Presents the results of the operations of an entity over
a peroid of time.
Includes: Revenues, Expenses, Income, Gains & Losses
Statement of Equity or Statement of Retained Earnings (Capital) - ANSWER✅Bridges
the gap between the income statement and the balance sheet.
Arrangement depends on type of organization:
Proprietorship: Statement of Owners Equity
Partnership: Statement of Partners Equity
Corporation: Statement of Stockholders Equity
In addition, it contains: Investments by Owners and Distribution to owners
Statement of Cash Flows - ANSWER✅Provides information about a company's cash
receipts and cash payments during a specific period of time.
Includes all 10 elements of financial statements: assets, liabilities, equity, net income,
income, gains, losses, Statement of 'X' Equity, Investments by Owners, Distributions to
Owners.
Cash Basis Accounting - ANSWER✅Revenue is recognized in the accounting period
in which the associated cash is received and Expenses are recognized in the
accounting period that the cash is paid.
Accrual Basis Accounting - ANSWER✅Revenue is recognized in the accounting
period in which the revenue is earned, regardless of when the associated revenue is
received. (Recorded when the sale is made, not when it is paid for.)
Depreciation - ANSWER✅A method of allocating the cost of a tangible asset over its
useful life. Businesses depreciate long-term assets for both tax and accounting
purposes.
Straight-Line Deprecation - ANSWER✅Straight Line Depreciation - (estimated
value/useful life)
Equal amounts of depreciation expense are recorded in each period of the useful life of
the asset, if not disposed of prior to the end of estimated useful life.
The value is divided among estimated life of item.
Double Declining Balance Depreciation - ANSWER✅Double Declining Balance
, An "accelerated" depreciation method (more expense is recorded in the early periods of
useful life and less in the later periods.)
Basic Inventory Equation for Goods - ANSWER✅Beginning Inventory + Purchases =
Goods
Basic Inventory Equation for Cost of Goods Sold (COGS) - ANSWER✅Goods
Available for Sale - Ending Inventory = Cost of Goods Sold (COGS)
Basic Inventory Equation for Ending Inventory - ANSWER✅Beginning Inventory +
Purchases = Goods Available for Sale - Cost of Goods Sold (COGS) = ending inventory
Periodic Inventory Accounting - ANSWER✅No transactions are recorded in the
inventory account until the end of the accounting period. Merchandise purchases are
recorded in a purchases account.
Inventory is counted and costed at the end of each accounting period. The inventory
account beginning balance is adjusted to physical inventory amount and the difference
is added to or subtracted from periodic Cost of Goods Sold.
Perpetual Inventory Accounting - ANSWER✅Merchandise purchases are added to the
inventory account when the merchandise is received.
Cost of Goods Sold is computed and subtracted from the inventory account as sales are
recorded.
FIFO (Inventory) - ANSWER✅Inventory Oldest items inventory are sold first
.(Example: Fruit)
LIFO (Inventory) - ANSWER✅Most recent items added to inventory are sold first.
(Example: Ore from Mining)
Average Cost (Inventory) - ANSWER✅Ending inventory units are costed using an
average cost of goods available divided by the units available for sale. (Example: Rope)
Specific Identification (Inventory) - ANSWER✅Inventory items are tagged with their
cost. (Example: automobiles)
Generally Accepted Accounting Principles (GAAP) - ANSWER✅A framework of
accounting standards, rules and procedures defined by the professional accounting
industry, which has been adopted by nearly all publicly traded U.S. companies.
Securities Act of 1935 - ANSWER✅Established the SEC Securities and Exchange
Commission with the explicit authority to establish the rules, standards, and procedures
Premium 2026–2027 Exam Study Guide:
Updated Questions, Fully Explained
Solutions, Concept Reinforcement &
Strategic Revision Support
Description
The Premium 2026–2027 Exam Study Guide
is a carefully developed resource designed to
support students in achieving stronger exam
performance through structured practice, clear
explanations, and focused revision
techniques.
This guide provides more than just practice
material—it offers a guided learning
approach that helps you understand key
concepts, apply them correctly, and improve
your ability to handle exam questions with
confidence. By combining updated
questions with well-
,Balance Sheet - ANSWER✅Attempts to describe the financial condition of the firm at a
point in time.
Includes: Assets, Liabilities, & Equity - "net assets" what remains after deducting
liabilities from assets..
Income Statement - ANSWER✅Presents the results of the operations of an entity over
a peroid of time.
Includes: Revenues, Expenses, Income, Gains & Losses
Statement of Equity or Statement of Retained Earnings (Capital) - ANSWER✅Bridges
the gap between the income statement and the balance sheet.
Arrangement depends on type of organization:
Proprietorship: Statement of Owners Equity
Partnership: Statement of Partners Equity
Corporation: Statement of Stockholders Equity
In addition, it contains: Investments by Owners and Distribution to owners
Statement of Cash Flows - ANSWER✅Provides information about a company's cash
receipts and cash payments during a specific period of time.
Includes all 10 elements of financial statements: assets, liabilities, equity, net income,
income, gains, losses, Statement of 'X' Equity, Investments by Owners, Distributions to
Owners.
Cash Basis Accounting - ANSWER✅Revenue is recognized in the accounting period
in which the associated cash is received and Expenses are recognized in the
accounting period that the cash is paid.
Accrual Basis Accounting - ANSWER✅Revenue is recognized in the accounting
period in which the revenue is earned, regardless of when the associated revenue is
received. (Recorded when the sale is made, not when it is paid for.)
Depreciation - ANSWER✅A method of allocating the cost of a tangible asset over its
useful life. Businesses depreciate long-term assets for both tax and accounting
purposes.
Straight-Line Deprecation - ANSWER✅Straight Line Depreciation - (estimated
value/useful life)
Equal amounts of depreciation expense are recorded in each period of the useful life of
the asset, if not disposed of prior to the end of estimated useful life.
The value is divided among estimated life of item.
Double Declining Balance Depreciation - ANSWER✅Double Declining Balance
, An "accelerated" depreciation method (more expense is recorded in the early periods of
useful life and less in the later periods.)
Basic Inventory Equation for Goods - ANSWER✅Beginning Inventory + Purchases =
Goods
Basic Inventory Equation for Cost of Goods Sold (COGS) - ANSWER✅Goods
Available for Sale - Ending Inventory = Cost of Goods Sold (COGS)
Basic Inventory Equation for Ending Inventory - ANSWER✅Beginning Inventory +
Purchases = Goods Available for Sale - Cost of Goods Sold (COGS) = ending inventory
Periodic Inventory Accounting - ANSWER✅No transactions are recorded in the
inventory account until the end of the accounting period. Merchandise purchases are
recorded in a purchases account.
Inventory is counted and costed at the end of each accounting period. The inventory
account beginning balance is adjusted to physical inventory amount and the difference
is added to or subtracted from periodic Cost of Goods Sold.
Perpetual Inventory Accounting - ANSWER✅Merchandise purchases are added to the
inventory account when the merchandise is received.
Cost of Goods Sold is computed and subtracted from the inventory account as sales are
recorded.
FIFO (Inventory) - ANSWER✅Inventory Oldest items inventory are sold first
.(Example: Fruit)
LIFO (Inventory) - ANSWER✅Most recent items added to inventory are sold first.
(Example: Ore from Mining)
Average Cost (Inventory) - ANSWER✅Ending inventory units are costed using an
average cost of goods available divided by the units available for sale. (Example: Rope)
Specific Identification (Inventory) - ANSWER✅Inventory items are tagged with their
cost. (Example: automobiles)
Generally Accepted Accounting Principles (GAAP) - ANSWER✅A framework of
accounting standards, rules and procedures defined by the professional accounting
industry, which has been adopted by nearly all publicly traded U.S. companies.
Securities Act of 1935 - ANSWER✅Established the SEC Securities and Exchange
Commission with the explicit authority to establish the rules, standards, and procedures
