ETS MFT BUSINESS EXAM VERSION 3
COMPLETE QUESTIONS AND DETAILED SOLUTIONS
LATEST UPDATE THIS YEAR JUST RELEASED
Question 1: Which report is the connecting link between the
income statement and balance sheet?
A. cash flows statement
B. retained earnings statement
C. trial balance
D. all of the above
Answer:
a) cash flows statement
Question 2: The net cash flow from operating activities normally
differs from the amount of net income for the period. True or False
Answer:
True
Question 3: Expense accounts would have a balance on which
side?
A. Right side
B. left side
C. debit side
D. credit side
E. A & C
Answer:
e) A & C
,Question 4: right side, debit side A profit-making business
operating as a separated legal entity and in which ownership is
divided into shares of stock is known as
A. service business
B. corporation
C. partnership
D. proprietorship
Answer:
b) corporation
Question 5: A debit may signify a(n)
A. decrease in an asset account
B. increase in an asset account
C. increase in a liability account
D. increase in the capital stock account
Answer:
b) increase in an asset account
Question 6: Which of the following accounts would be classified as
a current asset on the balance sheet?
A. accounts receivable
B. office equipment
C. land
D. accumulated depreciation
Answer:
a) accounts receivable
,Question 7: Which of the following is NOT an element of internal
control?
A. monitoring
B. control procedures
C. control environment
D. compliance with laws and regulations
Answer:
d) compliance with laws and regulations
Question 8: A cash distribution of earnings by a corporation to its
stockholders is called a cash dividend. The three conditions that a
corporation must meet to pay a cash dividend are: sufficient
retained earnings, sufficient cash, and formal action by the board
of directors. True or False
Answer:
True
Question 9: Factors in computing depreciation are
A. useful life + initial cost = depreciable costs
B. initial costs - residual value = depreciable costs
C. market value + residual value = depreciable costs
D. none of the above
Answer:
b) initial costs - residual value = depreciable costs
Question 10: The statement of cash flows reports a firm's major
cash inflows and outflows for a period. It provides useful
information about a company's ability to do the following;
, A. generate cash from operations
B. meet its financial obligations
C. maintain and expand its operating capacity
D. all of the above
Answer:
d) all of the above
Question 11: Notes receivable are amounts that customers owe for
which a formal, written instrument of credit has been issued. If
longer than a year it is considered and investment. True or False
Answer:
True
Question 12: The excess of current assets of a business over its
current liabilities is called
A. quick ratio
B. inventory turnover
C. stockholder's equity
D. working capital
Answer:
d) working capital
Question 13: What two categories are considered under Period
Costs?
A. materials inventory and product costs
B. selling expenses and administrative expenses
C. work in process inventory and direct labor costs
D. direct labor costs and factory overhead
COMPLETE QUESTIONS AND DETAILED SOLUTIONS
LATEST UPDATE THIS YEAR JUST RELEASED
Question 1: Which report is the connecting link between the
income statement and balance sheet?
A. cash flows statement
B. retained earnings statement
C. trial balance
D. all of the above
Answer:
a) cash flows statement
Question 2: The net cash flow from operating activities normally
differs from the amount of net income for the period. True or False
Answer:
True
Question 3: Expense accounts would have a balance on which
side?
A. Right side
B. left side
C. debit side
D. credit side
E. A & C
Answer:
e) A & C
,Question 4: right side, debit side A profit-making business
operating as a separated legal entity and in which ownership is
divided into shares of stock is known as
A. service business
B. corporation
C. partnership
D. proprietorship
Answer:
b) corporation
Question 5: A debit may signify a(n)
A. decrease in an asset account
B. increase in an asset account
C. increase in a liability account
D. increase in the capital stock account
Answer:
b) increase in an asset account
Question 6: Which of the following accounts would be classified as
a current asset on the balance sheet?
A. accounts receivable
B. office equipment
C. land
D. accumulated depreciation
Answer:
a) accounts receivable
,Question 7: Which of the following is NOT an element of internal
control?
A. monitoring
B. control procedures
C. control environment
D. compliance with laws and regulations
Answer:
d) compliance with laws and regulations
Question 8: A cash distribution of earnings by a corporation to its
stockholders is called a cash dividend. The three conditions that a
corporation must meet to pay a cash dividend are: sufficient
retained earnings, sufficient cash, and formal action by the board
of directors. True or False
Answer:
True
Question 9: Factors in computing depreciation are
A. useful life + initial cost = depreciable costs
B. initial costs - residual value = depreciable costs
C. market value + residual value = depreciable costs
D. none of the above
Answer:
b) initial costs - residual value = depreciable costs
Question 10: The statement of cash flows reports a firm's major
cash inflows and outflows for a period. It provides useful
information about a company's ability to do the following;
, A. generate cash from operations
B. meet its financial obligations
C. maintain and expand its operating capacity
D. all of the above
Answer:
d) all of the above
Question 11: Notes receivable are amounts that customers owe for
which a formal, written instrument of credit has been issued. If
longer than a year it is considered and investment. True or False
Answer:
True
Question 12: The excess of current assets of a business over its
current liabilities is called
A. quick ratio
B. inventory turnover
C. stockholder's equity
D. working capital
Answer:
d) working capital
Question 13: What two categories are considered under Period
Costs?
A. materials inventory and product costs
B. selling expenses and administrative expenses
C. work in process inventory and direct labor costs
D. direct labor costs and factory overhead
