MBA EXIT EXAM FULL
TEST QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Acid-Test Ratio - ANS-The ratio of current assets And current liabilities also called
quick ratio. The ratio equals the sum of a company's cash, short term investments, and
accounts receivable divided by its current liabilities. This ratio shows how well of
business is able to cover it short term obligations.
A quick ratio of one means - ANS-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 - ANS-Indicates that the most liquid assets of a
business exceed its total debts.
A quick ratio of less than one means - ANS-Indicates that a business would not be able
to repay all its debts by using its most liquid assets
net income from operations - ANS-gross profit - operating expenses
change in equity equation - ANS-Beginning Balance + Additional Investments=Ending
Balance
Retained Earnings Equation - ANS-Beginning Retained Earnings + Net Income -
Dividends = Ending Retained Earnings
,permanent accounts - ANS-balance sheet accounts whose balances are carried forward
to the next accounting period
temporary accounts - ANS-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 - ANS-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 - ANS-(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. - ANS-(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 - ANS-(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 - ANS-(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?
(A) $700,000
(B) $1,200,000
(C) $3,000,000
(D) $4,400,000 - ANS-(B) $1,200,000
TEST QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Acid-Test Ratio - ANS-The ratio of current assets And current liabilities also called
quick ratio. The ratio equals the sum of a company's cash, short term investments, and
accounts receivable divided by its current liabilities. This ratio shows how well of
business is able to cover it short term obligations.
A quick ratio of one means - ANS-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 - ANS-Indicates that the most liquid assets of a
business exceed its total debts.
A quick ratio of less than one means - ANS-Indicates that a business would not be able
to repay all its debts by using its most liquid assets
net income from operations - ANS-gross profit - operating expenses
change in equity equation - ANS-Beginning Balance + Additional Investments=Ending
Balance
Retained Earnings Equation - ANS-Beginning Retained Earnings + Net Income -
Dividends = Ending Retained Earnings
,permanent accounts - ANS-balance sheet accounts whose balances are carried forward
to the next accounting period
temporary accounts - ANS-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 - ANS-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 - ANS-(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. - ANS-(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 - ANS-(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 - ANS-(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?
(A) $700,000
(B) $1,200,000
(C) $3,000,000
(D) $4,400,000 - ANS-(B) $1,200,000
