1|Page
ETS MFT Business Exam Version 3 — Study Guide 2025 | Major Field Test in Business
Practice Questions, Answers
Prepare for the ETS MFT Business Exam Version 3 with this 2025 comprehensive review.
Covers major business disciplines including accounting, economics, finance, management,
marketing, quantitative analysis, information systems, legal/ethical environment and
international business. Includes MFT-style practice questions and detailed answers.
• ETS MFT Business Exam Version 3
• Major Field Test in Business Version 3
• ETS MFT Business study guide 2025
•
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
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
Which of the following accounts would be classified as a current asset on the balance sheet?
,2|Page
a) accounts receivable
b) office equipment
c) land
d) accumulated depreciation - ANSWER-a) accounts receivable
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
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
Which of the following are/is potential ways to find the price of what a produced product should cost?
a) product cost concept
b) total cost concept
c) variable cost concept
d) all of the above - ANSWER-d) all of the above
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
The net cash flow from operating activities normally differs from the amount of net income for the
period.
,3|Page
True or False - ANSWER-True
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
right side, debit side
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
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
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
The excess of current assets of a business over its current liabilities is called
, 4|Page
a) quick ratio
b) inventory turnover
c) stockholder's equity
d) working capital - ANSWER-d) working capital
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 - ANSWER-b) selling expenses and administrative expenses
The effect of a difference in the number of units sold, assuming no change in unit sales price or unit cost
is
a) quantity factor
b) unit cost factor
c) contribution margin analysis
d) product pricing - ANSWER-a) quantity factor
A cost that will not be affected by later decisions is termed a(n)
a) differential cost
b) replacement cost
c) sunk cost
d) historical cost - ANSWER-c) sunk cost
The unfavorable volume variance may be due to all but the following factors;
a) unexpected increases in the cost of utilities
b) failure to maintain an even flow of work
c) failure to obtain enough sales orders
d) machine breakdowns - ANSWER-a) unexpected increases in the cost of utilities
ETS MFT Business Exam Version 3 — Study Guide 2025 | Major Field Test in Business
Practice Questions, Answers
Prepare for the ETS MFT Business Exam Version 3 with this 2025 comprehensive review.
Covers major business disciplines including accounting, economics, finance, management,
marketing, quantitative analysis, information systems, legal/ethical environment and
international business. Includes MFT-style practice questions and detailed answers.
• ETS MFT Business Exam Version 3
• Major Field Test in Business Version 3
• ETS MFT Business study guide 2025
•
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
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
Which of the following accounts would be classified as a current asset on the balance sheet?
,2|Page
a) accounts receivable
b) office equipment
c) land
d) accumulated depreciation - ANSWER-a) accounts receivable
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
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
Which of the following are/is potential ways to find the price of what a produced product should cost?
a) product cost concept
b) total cost concept
c) variable cost concept
d) all of the above - ANSWER-d) all of the above
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
The net cash flow from operating activities normally differs from the amount of net income for the
period.
,3|Page
True or False - ANSWER-True
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
right side, debit side
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
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
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
The excess of current assets of a business over its current liabilities is called
, 4|Page
a) quick ratio
b) inventory turnover
c) stockholder's equity
d) working capital - ANSWER-d) working capital
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 - ANSWER-b) selling expenses and administrative expenses
The effect of a difference in the number of units sold, assuming no change in unit sales price or unit cost
is
a) quantity factor
b) unit cost factor
c) contribution margin analysis
d) product pricing - ANSWER-a) quantity factor
A cost that will not be affected by later decisions is termed a(n)
a) differential cost
b) replacement cost
c) sunk cost
d) historical cost - ANSWER-c) sunk cost
The unfavorable volume variance may be due to all but the following factors;
a) unexpected increases in the cost of utilities
b) failure to maintain an even flow of work
c) failure to obtain enough sales orders
d) machine breakdowns - ANSWER-a) unexpected increases in the cost of utilities
