ETS Major Field Test UPDATED ACTUAL
Questions and CORRECT Answers
Conceptual Foundations of Financial Accounting - CORRECT ANSWER - - Elements of
financial statements
- Basic concepts of reporting
Financial Accounting Documents - CORRECT ANSWER - - Income Statement and
Statement of Retained Earnings
- Balance Sheet
- Statement of Cash Flows
Managerial Accounting Concepts - CORRECT ANSWER - - Cost concepts
- Product costing systems
- Activity-based costing
- Cost, volume, profit analysis
- Budgeting
- Standar costing
- Non-routine decision making
- Relevant variable analysis
Elements of Financial Statements - CORRECT ANSWER - - Assets: Future economic
value
- Liabilities: Future economic obligations
- Owners' equity: net assets (assets minus liabilities)
- Revenues - increase net income
- Expenses - decrease net income
,Revenue Recognition - CORRECT ANSWER - Recognize revenue when EARNED
(performance) regardless of when cash is RECEIVED
Matching Concept - CORRECT ANSWER - Recognize expense when INCURRED (used)
in an attempt to generate revenue regardless of when cash is PAID
Accounts Receivable - CORRECT ANSWER - Shown at its net realizable value
Inventory - CORRECT ANSWER - Use FIFO, LIFO, WA, and LCM
Property, plant, & equipment - CORRECT ANSWER - Shown net of depreciation
Intangibles - CORRECT ANSWER - Shown net of amortization
Long-Term Debt - CORRECT ANSWER - Shown at carrying value (face value plus
premium or less discount)
Common Stock - CORRECT ANSWER - Shown at par value
Preferred Stock - CORRECT ANSWER - Shown at par value; preferences are for
dividends and liquidation
Retained Earnings - CORRECT ANSWER - Earnings (net income) retained (not
distributed to shareholders) by the company
Elements of an Income Statement - CORRECT ANSWER - - Sales
- Less cost of goods sold
- Gross Margin
- Less selling & administration
, - Income before tax
- Less taxes (provision for taxes)
- Net income
Statement of Owners' Equity - CORRECT ANSWER - Shows changes in owners'
(shareholders') equity during the period
Elements of the Statement of Owners' Equity - CORRECT ANSWER - Retained Earnings
Portion:
- Beginning balance
- Add net income
- Subtract dividends declared
- Equals ending balance
Balance Sheet - CORRECT ANSWER - Shows that assets= liabilities + owners' equity
- Assets shown in order of liquidity
- Liabilities show in order that they are due
- Owners' equity shown: contributed capital; retained earnings; treasury stock (latter subtracted)
Statement of Cash Flows - CORRECT ANSWER - Three Sections: Operating, Investing,&
Financing
Statement of Cash Flows: Operating - CORRECT ANSWER - Cash paid and received
from operating activities
Statement of Cash Flows: Investing - CORRECT ANSWER - Cash paid and received from
long-term asset activities
Statement of Cash Flows: Financing - CORRECT ANSWER - Cash paid and received
from long-term debt and owners' equity activities
Questions and CORRECT Answers
Conceptual Foundations of Financial Accounting - CORRECT ANSWER - - Elements of
financial statements
- Basic concepts of reporting
Financial Accounting Documents - CORRECT ANSWER - - Income Statement and
Statement of Retained Earnings
- Balance Sheet
- Statement of Cash Flows
Managerial Accounting Concepts - CORRECT ANSWER - - Cost concepts
- Product costing systems
- Activity-based costing
- Cost, volume, profit analysis
- Budgeting
- Standar costing
- Non-routine decision making
- Relevant variable analysis
Elements of Financial Statements - CORRECT ANSWER - - Assets: Future economic
value
- Liabilities: Future economic obligations
- Owners' equity: net assets (assets minus liabilities)
- Revenues - increase net income
- Expenses - decrease net income
,Revenue Recognition - CORRECT ANSWER - Recognize revenue when EARNED
(performance) regardless of when cash is RECEIVED
Matching Concept - CORRECT ANSWER - Recognize expense when INCURRED (used)
in an attempt to generate revenue regardless of when cash is PAID
Accounts Receivable - CORRECT ANSWER - Shown at its net realizable value
Inventory - CORRECT ANSWER - Use FIFO, LIFO, WA, and LCM
Property, plant, & equipment - CORRECT ANSWER - Shown net of depreciation
Intangibles - CORRECT ANSWER - Shown net of amortization
Long-Term Debt - CORRECT ANSWER - Shown at carrying value (face value plus
premium or less discount)
Common Stock - CORRECT ANSWER - Shown at par value
Preferred Stock - CORRECT ANSWER - Shown at par value; preferences are for
dividends and liquidation
Retained Earnings - CORRECT ANSWER - Earnings (net income) retained (not
distributed to shareholders) by the company
Elements of an Income Statement - CORRECT ANSWER - - Sales
- Less cost of goods sold
- Gross Margin
- Less selling & administration
, - Income before tax
- Less taxes (provision for taxes)
- Net income
Statement of Owners' Equity - CORRECT ANSWER - Shows changes in owners'
(shareholders') equity during the period
Elements of the Statement of Owners' Equity - CORRECT ANSWER - Retained Earnings
Portion:
- Beginning balance
- Add net income
- Subtract dividends declared
- Equals ending balance
Balance Sheet - CORRECT ANSWER - Shows that assets= liabilities + owners' equity
- Assets shown in order of liquidity
- Liabilities show in order that they are due
- Owners' equity shown: contributed capital; retained earnings; treasury stock (latter subtracted)
Statement of Cash Flows - CORRECT ANSWER - Three Sections: Operating, Investing,&
Financing
Statement of Cash Flows: Operating - CORRECT ANSWER - Cash paid and received
from operating activities
Statement of Cash Flows: Investing - CORRECT ANSWER - Cash paid and received from
long-term asset activities
Statement of Cash Flows: Financing - CORRECT ANSWER - Cash paid and received
from long-term debt and owners' equity activities
