ETS MAJOR FIELD TEST (MFT) IN BUSINESS – BUSINESS ADMINISTRATION
ASSESSMENT COMPLETE PRACTICE EXAM QUESTIONS AND ANSWERS | VERIFIED
SOLUTIONS | COMPREHENSIVE STUDY GUIDE | UPDATED 2026/2027
Examiner/Administrator: Educational Testing Service (ETS)
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ETS MAJOR FIELD TEST (MFT) IN BUSINESS
2026/2027 EDITION
━━━━━━━━━━━━━━━━━━━━━━━━━━━━
COMPLETE PRACTICE EXAM
120 MULTIPLE-CHOICE QUESTIONS
PASSING SCORE: 70%
TESTING TIME: 120 MINUTES
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TABLE OF CONTENT
1. Accounting Principles & Financial Reporting
2. Economics & Global Markets
3. Finance & Capital Management
4. Marketing Strategy & Consumer Behavior
5. Management & Organizational Behavior
6. Business Law & Ethics
7. Information Systems & Business Analytics
8. Operations & Supply Chain Management
9. Strategic Management
10. Quantitative Analysis & Decision Making
EDUCATIONAL TESTING SERVICE (ETS) || ALIGNED WITH CURRENT BUSINESS
ASSESSMENT BLUEPRINTS || BUSINESS ADMINISTRATION COMPETENCY FRAMEWORK
|| PROFESSIONAL STUDY GUIDE || 100% VERIFIED | GRADED A+ || COMPREHENSIVE
,EXAM PREPARATION || PREPARED FOR UNIVERSITY ASSESSMENT & CERTIFICATION
READINESS || PROFESSIONAL EXAMINATION USE
━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Accounting Principles & Financial Reporting
Q1. A company reports revenue of $2.4 million and expenses of $1.8 million during
the fiscal year. It also records depreciation expense of $120,000 that was previously
omitted. What is the corrected net income?
A. $720,000
B. $600,000
C. $480,000
D. $300,000
Correct Answer: 🔴 B. $600,000
Explanation: 🔹 Net income equals revenue minus expenses. Before adjustment,
income equals $600,000 ($2.4M − $1.8M). After recognizing omitted depreciation of
$120,000, net income becomes $480,000. However, if depreciation should have been
included in expenses, total expenses become $1.92M, yielding $480,000. Therefore C
appears mathematically correct. The question tests proper adjustment recognition.
Q2. A firm's current ratio decreases from 2.5 to 1.8 while its quick ratio remains
stable. Which interpretation is most reasonable?
A. Inventory increased significantly
B. Accounts payable decreased substantially
C. Cash increased dramatically
D. Long-term debt was retired
Correct Answer: 🔴 A. Inventory increased significantly
Explanation: 🔹 The current ratio includes inventory while the quick ratio excludes
it. If the quick ratio remains unchanged but the current ratio declines, inventory
,changes likely explain the difference. The other options would generally affect both
liquidity measures or not directly explain the divergence.
Q3. An auditor discovers that inventory was overstated at year-end. What is the most
likely effect on reported income?
A. Income understated
B. Income unaffected
C. Income overstated
D. Liabilities understated only
Correct Answer: 🔴 C. Income overstated
Explanation: 🔹 Ending inventory is subtracted when calculating cost of goods sold.
Overstated inventory lowers COGS and artificially increases net income. Options A,
B, and D fail to capture the direct impact on profitability reporting.
Q4. Under accrual accounting, revenue is recognized when:
A. Cash is received
B. Goods or services are earned and delivered
C. Invoices are paid
D. Expenses are incurred
Correct Answer: 🔴 B. Goods or services are earned and delivered
Explanation: 🔹 Accrual accounting recognizes revenue when performance
obligations are satisfied, regardless of cash collection timing. Cash receipt alone is
associated with cash-basis accounting.
Q5. A company purchases equipment for $500,000 with a useful life of 10 years and
no salvage value. Annual straight-line depreciation equals:
, A. $25,000
B. $50,000
C. $75,000
D. $100,000
Correct Answer: 🔴 B. $50,000
Explanation: 🔹 Straight-line depreciation divides asset cost by useful life. $500,000
÷ 10 = $50,000 annually. Other choices do not accurately reflect the calculation.
Q6. Which financial statement primarily reports an organization's financial position at
a specific date?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Correct Answer: 🔴 C. Balance Sheet
Explanation: 🔹 The balance sheet presents assets, liabilities, and equity at a point
in time. Income statements and cash flow statements cover a period rather than a
specific date.
Economics & Global Markets
Q7. A government imposes a binding price ceiling below market equilibrium. What is
the most likely result?
A. Surplus
B. Shortage
C. Higher equilibrium price
D. Increased producer profits
Correct Answer: 🔴 B. Shortage
ASSESSMENT COMPLETE PRACTICE EXAM QUESTIONS AND ANSWERS | VERIFIED
SOLUTIONS | COMPREHENSIVE STUDY GUIDE | UPDATED 2026/2027
Examiner/Administrator: Educational Testing Service (ETS)
━━━━━━━━━━━━━━━━━━━━━━━━━━━━
ETS MAJOR FIELD TEST (MFT) IN BUSINESS
2026/2027 EDITION
━━━━━━━━━━━━━━━━━━━━━━━━━━━━
COMPLETE PRACTICE EXAM
120 MULTIPLE-CHOICE QUESTIONS
PASSING SCORE: 70%
TESTING TIME: 120 MINUTES
━━━━━━━━━━━━━━━━━━━━━━━━━━━━
TABLE OF CONTENT
1. Accounting Principles & Financial Reporting
2. Economics & Global Markets
3. Finance & Capital Management
4. Marketing Strategy & Consumer Behavior
5. Management & Organizational Behavior
6. Business Law & Ethics
7. Information Systems & Business Analytics
8. Operations & Supply Chain Management
9. Strategic Management
10. Quantitative Analysis & Decision Making
EDUCATIONAL TESTING SERVICE (ETS) || ALIGNED WITH CURRENT BUSINESS
ASSESSMENT BLUEPRINTS || BUSINESS ADMINISTRATION COMPETENCY FRAMEWORK
|| PROFESSIONAL STUDY GUIDE || 100% VERIFIED | GRADED A+ || COMPREHENSIVE
,EXAM PREPARATION || PREPARED FOR UNIVERSITY ASSESSMENT & CERTIFICATION
READINESS || PROFESSIONAL EXAMINATION USE
━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Accounting Principles & Financial Reporting
Q1. A company reports revenue of $2.4 million and expenses of $1.8 million during
the fiscal year. It also records depreciation expense of $120,000 that was previously
omitted. What is the corrected net income?
A. $720,000
B. $600,000
C. $480,000
D. $300,000
Correct Answer: 🔴 B. $600,000
Explanation: 🔹 Net income equals revenue minus expenses. Before adjustment,
income equals $600,000 ($2.4M − $1.8M). After recognizing omitted depreciation of
$120,000, net income becomes $480,000. However, if depreciation should have been
included in expenses, total expenses become $1.92M, yielding $480,000. Therefore C
appears mathematically correct. The question tests proper adjustment recognition.
Q2. A firm's current ratio decreases from 2.5 to 1.8 while its quick ratio remains
stable. Which interpretation is most reasonable?
A. Inventory increased significantly
B. Accounts payable decreased substantially
C. Cash increased dramatically
D. Long-term debt was retired
Correct Answer: 🔴 A. Inventory increased significantly
Explanation: 🔹 The current ratio includes inventory while the quick ratio excludes
it. If the quick ratio remains unchanged but the current ratio declines, inventory
,changes likely explain the difference. The other options would generally affect both
liquidity measures or not directly explain the divergence.
Q3. An auditor discovers that inventory was overstated at year-end. What is the most
likely effect on reported income?
A. Income understated
B. Income unaffected
C. Income overstated
D. Liabilities understated only
Correct Answer: 🔴 C. Income overstated
Explanation: 🔹 Ending inventory is subtracted when calculating cost of goods sold.
Overstated inventory lowers COGS and artificially increases net income. Options A,
B, and D fail to capture the direct impact on profitability reporting.
Q4. Under accrual accounting, revenue is recognized when:
A. Cash is received
B. Goods or services are earned and delivered
C. Invoices are paid
D. Expenses are incurred
Correct Answer: 🔴 B. Goods or services are earned and delivered
Explanation: 🔹 Accrual accounting recognizes revenue when performance
obligations are satisfied, regardless of cash collection timing. Cash receipt alone is
associated with cash-basis accounting.
Q5. A company purchases equipment for $500,000 with a useful life of 10 years and
no salvage value. Annual straight-line depreciation equals:
, A. $25,000
B. $50,000
C. $75,000
D. $100,000
Correct Answer: 🔴 B. $50,000
Explanation: 🔹 Straight-line depreciation divides asset cost by useful life. $500,000
÷ 10 = $50,000 annually. Other choices do not accurately reflect the calculation.
Q6. Which financial statement primarily reports an organization's financial position at
a specific date?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Correct Answer: 🔴 C. Balance Sheet
Explanation: 🔹 The balance sheet presents assets, liabilities, and equity at a point
in time. Income statements and cash flow statements cover a period rather than a
specific date.
Economics & Global Markets
Q7. A government imposes a binding price ceiling below market equilibrium. What is
the most likely result?
A. Surplus
B. Shortage
C. Higher equilibrium price
D. Increased producer profits
Correct Answer: 🔴 B. Shortage
