MBA EXIT CERTIFICATION EVALUATION
2026 EXAM Q&A STUDY SHEET
◉A quick ratio of one means. Answer: The most liquid assets of a
business or equal to its total deaths in the business will just manage
to repay all his debts by using its cash, marketable securities, and
accounts receivable.
◉A quick ratio of more than one means. Answer: Indicates that the
most liquid assets of a business exceed its total debts.
◉A quick ratio of less than one means. Answer: Indicates that a
business would not be able to repay all its debts by using its most
liquid assets
◉net income from operations. Answer: gross profit - operating
expenses
◉change in equity equation. Answer: Beginning Balance +
Additional Investments=Ending Balance
,◉Retained Earnings Equation. Answer: Beginning Retained
Earnings + Net Income - Dividends = Ending Retained Earnings
◉permanent accounts. Answer: balance sheet accounts whose
balances are carried forward to the next accounting period
◉temporary accounts. Answer: Revenue, expense, and dividend
accounts whose balances a company transfers to Retained Earnings
at the end of an accounting period.
◉The book value of an asset is equal to the. Answer: d. asset's cost
less accumulated depreciation.
◉Which of the following organizations is most likely
to use project financing?
(A) A small start-up
(B) A financial services firm with an extensive client list
(C) A large consumer goods company
(D) A large public utility involved ininfrastructure development.
Answer: (D) A large public utility involved in infrastructure
development
◉Prosco Ltd. employs a process cost system. Inspection of units
occurs at the 50 percent mark. Defective units are then removed
,from the process, and their cost ($4.50) is absorbed by the good
units. Prosco has recently been approached by a firm wishing to buy
the defective units for a special use. The firm would require Prosco
to modify the defective units at a unit cost of $2.00. If Prosco sells
the defective units to the firm for $5.00 each, how would Prosco's
reported income be affected?
(A) It would decrease by $4.50 per unit sold.
(B) It would decrease by $1.50 per unit sold.
(C) It would increase by $3.00 per unit sold.
(D) It would increase by $5.00 per unit sold.. Answer: (C) It would
increase by $3.00 per unit sold.
◉If you were the holder of a call option (having cost you $2) on
some stock with an exercise price of$20, it would be best for you to
exercise your option when the market price is at
(A) $18
(B) $20
(C) $22
(D) $24. Answer: (D) $24
◉The sales division of a corporation is considering an internal
product transfer because of excess demand. What is the lowest
acceptable transfer price for the product?
(A) The amount that the company would have to pay to acquire a
similar product
, (B) The variable cost of producing a unit of product
(C) The full absorption cost of producing a unit of product
(D) The difference between the market price and the costs
recaptured by transferring internally. Answer: (D) The difference
between the market price and the costs recaptured by transferring
internally
◉The Mart, a large retail chain, is considering whether or not to
close down a division. The division's projected income statement for
the next year follows.
-Sales $20,000,000
-Cost of goods sold 17,000,000
-Gross profit 3,000,000
-Operating costs:
-Building rents $2,500,000
-Store clerk salaries 3,000,000
-Store utilities 1,200,000
-Allocated home office cost 700,000
-Total operating costs 7,400,000
-Anticipated loss ($4,400,000)
The building rents arise from long-term leases that cannot be
cancelled. If The Mart closed down this division, what would be the
increase in company profits?
2026 EXAM Q&A STUDY SHEET
◉A quick ratio of one means. Answer: The most liquid assets of a
business or equal to its total deaths in the business will just manage
to repay all his debts by using its cash, marketable securities, and
accounts receivable.
◉A quick ratio of more than one means. Answer: Indicates that the
most liquid assets of a business exceed its total debts.
◉A quick ratio of less than one means. Answer: Indicates that a
business would not be able to repay all its debts by using its most
liquid assets
◉net income from operations. Answer: gross profit - operating
expenses
◉change in equity equation. Answer: Beginning Balance +
Additional Investments=Ending Balance
,◉Retained Earnings Equation. Answer: Beginning Retained
Earnings + Net Income - Dividends = Ending Retained Earnings
◉permanent accounts. Answer: balance sheet accounts whose
balances are carried forward to the next accounting period
◉temporary accounts. Answer: Revenue, expense, and dividend
accounts whose balances a company transfers to Retained Earnings
at the end of an accounting period.
◉The book value of an asset is equal to the. Answer: d. asset's cost
less accumulated depreciation.
◉Which of the following organizations is most likely
to use project financing?
(A) A small start-up
(B) A financial services firm with an extensive client list
(C) A large consumer goods company
(D) A large public utility involved ininfrastructure development.
Answer: (D) A large public utility involved in infrastructure
development
◉Prosco Ltd. employs a process cost system. Inspection of units
occurs at the 50 percent mark. Defective units are then removed
,from the process, and their cost ($4.50) is absorbed by the good
units. Prosco has recently been approached by a firm wishing to buy
the defective units for a special use. The firm would require Prosco
to modify the defective units at a unit cost of $2.00. If Prosco sells
the defective units to the firm for $5.00 each, how would Prosco's
reported income be affected?
(A) It would decrease by $4.50 per unit sold.
(B) It would decrease by $1.50 per unit sold.
(C) It would increase by $3.00 per unit sold.
(D) It would increase by $5.00 per unit sold.. Answer: (C) It would
increase by $3.00 per unit sold.
◉If you were the holder of a call option (having cost you $2) on
some stock with an exercise price of$20, it would be best for you to
exercise your option when the market price is at
(A) $18
(B) $20
(C) $22
(D) $24. Answer: (D) $24
◉The sales division of a corporation is considering an internal
product transfer because of excess demand. What is the lowest
acceptable transfer price for the product?
(A) The amount that the company would have to pay to acquire a
similar product
, (B) The variable cost of producing a unit of product
(C) The full absorption cost of producing a unit of product
(D) The difference between the market price and the costs
recaptured by transferring internally. Answer: (D) The difference
between the market price and the costs recaptured by transferring
internally
◉The Mart, a large retail chain, is considering whether or not to
close down a division. The division's projected income statement for
the next year follows.
-Sales $20,000,000
-Cost of goods sold 17,000,000
-Gross profit 3,000,000
-Operating costs:
-Building rents $2,500,000
-Store clerk salaries 3,000,000
-Store utilities 1,200,000
-Allocated home office cost 700,000
-Total operating costs 7,400,000
-Anticipated loss ($4,400,000)
The building rents arise from long-term leases that cannot be
cancelled. If The Mart closed down this division, what would be the
increase in company profits?
