ETS Business Exam Study Guide
Questions and Answers (Latest 2026)
What costs should be considered when making non-routine
decisions? - Correct Answers ✅The price of material,
Factory overhead costs, and the price of labor
Total product divided by units produced and sold equals
what? - Correct Answers ✅Product Cost per Unit
How do you calculate contribution margin? - Correct
Answers ✅Subtract variable costs from sales
In a continuous budget plan how many months are generally
planned? - Correct Answers ✅12 months
Which of the following is not one of the weaknesses of
standard costing? - Correct Answers ✅It makes accounting
for price increases more accurate
What are the potential ways to find the price of what
produced products should cost? - Correct Answers
✅Product cost concept, total cost concept, and variable cost
concept
Which report is the connecting link between the income
statement and the balance sheet? - Correct Answers
✅Cash flow statement
,ETS Business Exam Study Guide
Questions and Answers (Latest 2026)
True or False: The net cash flow from operating activities
normally differs from the amount of net income for the
period. - Correct Answers ✅True
Expense accounts would have a balance on which side? -
Correct Answers ✅Left 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 what? - Correct Answers ✅Corporation
A debt may slightly - Correct Answers ✅Increase in an
asset account
What would be classified as a current asset on the balance
sheet? - Correct Answers ✅Accounts receivable
What are the elements of internal control? - Correct
Answers ✅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. - Correct Answers
✅True
,ETS Business Exam Study Guide
Questions and Answers (Latest 2026)
Factors in computing depreciation are? - Correct Answers
✅Initial cost + residual value = depreciable
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? -
Correct Answers ✅Meet its financial obligations, generate
cash from operations, and maintain and expand its operating
capacity
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. -
Correct Answers ✅True
The excess of current assets of a business over its current
liabilities is called what? - Correct Answers ✅Working
capital
What 2 categories are considered under period costs? -
Correct Answers ✅Selling expenses and administrative
expenses
The effect of a difference in the number of units sold,
assuming no charge in unit sales price or unit cost is... -
Correct Answers ✅Quantity factor
, ETS Business Exam Study Guide
Questions and Answers (Latest 2026)
A cost that will not be affected by later decisions is termed a
what? - Correct Answers ✅Sunk Cost
The unfavorable volume variance may be due to all but the
following facts: - Correct Answers ✅Unexpected increases
in the cost of utilities
What budget allows for adjustments in activity levels? -
Correct Answers ✅Flexible budget
A budget that summarizes future plans for the acquisition of
fixed assets is called the... - Correct Answers ✅Capital
expenditures budget
What are the standard framework of guidelines for financial
accounting used in any given jurisdiction, also known as
accounting standards? - Correct Answers ✅GAAP
What occurs when the price level rises? - Correct Answers
✅People need to hold more money, so interest rates rise,
making firms borrow and invest less
The federal government enacted regulation in the 1960's
requiring people to wear seatbelt in their cars. All of the
Questions and Answers (Latest 2026)
What costs should be considered when making non-routine
decisions? - Correct Answers ✅The price of material,
Factory overhead costs, and the price of labor
Total product divided by units produced and sold equals
what? - Correct Answers ✅Product Cost per Unit
How do you calculate contribution margin? - Correct
Answers ✅Subtract variable costs from sales
In a continuous budget plan how many months are generally
planned? - Correct Answers ✅12 months
Which of the following is not one of the weaknesses of
standard costing? - Correct Answers ✅It makes accounting
for price increases more accurate
What are the potential ways to find the price of what
produced products should cost? - Correct Answers
✅Product cost concept, total cost concept, and variable cost
concept
Which report is the connecting link between the income
statement and the balance sheet? - Correct Answers
✅Cash flow statement
,ETS Business Exam Study Guide
Questions and Answers (Latest 2026)
True or False: The net cash flow from operating activities
normally differs from the amount of net income for the
period. - Correct Answers ✅True
Expense accounts would have a balance on which side? -
Correct Answers ✅Left 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 what? - Correct Answers ✅Corporation
A debt may slightly - Correct Answers ✅Increase in an
asset account
What would be classified as a current asset on the balance
sheet? - Correct Answers ✅Accounts receivable
What are the elements of internal control? - Correct
Answers ✅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. - Correct Answers
✅True
,ETS Business Exam Study Guide
Questions and Answers (Latest 2026)
Factors in computing depreciation are? - Correct Answers
✅Initial cost + residual value = depreciable
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? -
Correct Answers ✅Meet its financial obligations, generate
cash from operations, and maintain and expand its operating
capacity
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. -
Correct Answers ✅True
The excess of current assets of a business over its current
liabilities is called what? - Correct Answers ✅Working
capital
What 2 categories are considered under period costs? -
Correct Answers ✅Selling expenses and administrative
expenses
The effect of a difference in the number of units sold,
assuming no charge in unit sales price or unit cost is... -
Correct Answers ✅Quantity factor
, ETS Business Exam Study Guide
Questions and Answers (Latest 2026)
A cost that will not be affected by later decisions is termed a
what? - Correct Answers ✅Sunk Cost
The unfavorable volume variance may be due to all but the
following facts: - Correct Answers ✅Unexpected increases
in the cost of utilities
What budget allows for adjustments in activity levels? -
Correct Answers ✅Flexible budget
A budget that summarizes future plans for the acquisition of
fixed assets is called the... - Correct Answers ✅Capital
expenditures budget
What are the standard framework of guidelines for financial
accounting used in any given jurisdiction, also known as
accounting standards? - Correct Answers ✅GAAP
What occurs when the price level rises? - Correct Answers
✅People need to hold more money, so interest rates rise,
making firms borrow and invest less
The federal government enacted regulation in the 1960's
requiring people to wear seatbelt in their cars. All of the
