ETS Business Exam Study Guide

ETS Business Exam Study Guide Accounting: What costs should be considered when making non-routine decisions? (3) - ANSWER The price of material, Factory overhead costs, and the price of labor Accounting: Total product/ units produced and sold equals?? - ANSWER Product Cost per Unit Accounting: What is a general explanation of what the contribution margin is? - ANSWER The difference between variable costs subtracted from sales Accounting: In a continuous budget plan how many months are generally planned? - ANSWER 12 months Accounting: Which of the following is not one of the weaknesses of standard costing - ANSWER It makes accounting for price increases more accurate Accounting: What are the potential ways to find the price of what a produced products should cost? (3) - ANSWER Product cost concept, total cost concept, and variable cost concept Accounting: Which report is the connecting link between the income statement and the balance sheet? - ANSWER Cash flow statement The net cash flow from operating activities normally differs from the amount of net income for the period. - ANSWER True Accounting: Expense accounts would have a balance on which side? - ANSWER Left side Accounting: A profit-making business operating as a separated legal entity and in which ownership is divided into shares of stock is known as a... - ANSWER Corporation Accounting: A debt may slightly - ANSWER Increase in an asset account Accounting: What would be classified as a current asset on the balance sheet - ANSWER Accounts receivable Accounting: What are the elements of internal control? (3) - ANSWER Control environment, monitoring, and control procedures. True or False: A cash distribution of earnings by a corporation to its stockholders is called a CASH DIVIDEND. The 3 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. - ANSWER True Accounting: Factors in computing depreciation are? - ANSWER Initial cost + residual value = depreciable Accounting: 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?? - ANSWER Meet its financial obligations, generate cash from operations, and maintain and expand its operating capacity Accounting: True or False: Notes receivables are amounts that customers owe for which a formal, written instrument of credit has been issued. If longer than a year it is considered an investment. - ANSWER True Accounting: The excess of current assets of a business over its current liabilities is called? - ANSWER Working capital Accounting: What 2 categories are considered under period costs? - ANSWER selling expenses and administrative expenses Accounting: The effect of a difference in the number of units sold, assuming no charge in unit sales price or unit cost is... - ANSWER Quantity factor Accounting: A cost that will not be affected by later decisions is termed an - ANSWER Sunk Cost Accounting: The unfavorable volume variance may be due to all but the following facts... - ANSWER Unexpected increases in the cost of utilities Accounting: What budget allows for adjustments in activity levels? - ANSWER Flexible budget Accounting: A budget that summarizes future plans for the acquisition of fixed assets is the... - ANSWER Capital expenditures budget Accounting: What are the standard framework of guidelines for financial accounting used in any given jurisdiction, also known as accounting standards?? - ANSWER GAAP Economics: What occurs when the price level rises? - ANSWER People need to hold more money, so interest rates rise, making firms borrow and invest less Economics: The federal government enacted regulation in the 1960's requiring people to wear seatbelt in their cars. All of the following resulted from this regulation, EXCEPT: - ANSWER Fewer pedestrians were killed in car accidents. Economics: Which of the following is true regarding the production possibilities frontier model of the economy? - ANSWER Any point along the PPF represents an efficient level of production. Economics: If the price in a market happens to be above equilibrium, there will be a _____ in the market, and the price will tend to _____. - ANSWER Surplus, drop Economics: The price elasticity of demand tends to be more elastic... - ANSWER At points further up and to the left