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Major Field Test Business Study Set, ETS MFT BUSINESS EXAM Study Guide Solutions
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Major Field Test Business Study Set, ETS MFT BUSINESS EXAM Study Guide Solutions Balance Sheet - ANSWER-Attempts to describe the financial condition of the firm at a point in time. Includes: Assets, Liabilities, & Equity - "net assets" what remains after deducting liabilities from assets.. Inc...

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  • October 28, 2024
  • 132
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • major field test business study set ets mft busin

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  • ETS Major Field
  • ETS Major Field

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©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED

FIRST PUBLISH OCTOBER 2024




Major Field Test Business Study Set, ETS

MFT BUSINESS EXAM Study Guide

Solutions


Balance Sheet - ANSWER✔✔-Attempts to describe the financial condition of the firm at a point in time.


Includes: Assets, Liabilities, & Equity - "net assets" what remains after deducting liabilities from assets..


Income Statement - ANSWER✔✔-Presents the results of the operations of an entity over a peroid of

time.


Includes: Revenues, Expenses, Income, Gains & Losses


Statement of Equity or Statement of Retained Earnings (Capital) - ANSWER✔✔-Bridges the gap between

the income statement and the balance sheet.




Arrangement depends on type of organization:


Proprietorship: Statement of Owners Equity




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FIRST PUBLISH OCTOBER 2024




Partnership: Statement of Partners Equity


Corporation: Statement of Stockholders Equity




In addition, it contains: Investments by Owners and Distribution to owners


Statement of Cash Flows - ANSWER✔✔-Provides information about a company's cash receipts and cash

payments during a specific period of time.




Includes all 10 elements of financial statements: assets, liabilities, equity, net income, income, gains,

losses, Statement of 'X' Equity, Investments by Owners, Distributions to Owners.


Cash Basis Accounting - ANSWER✔✔-Revenue is recognized in the accounting period in which the

associated cash is received and Expenses are recognized in the accounting period that the cash is paid.


Accrual Basis Accounting - ANSWER✔✔-Revenue is recognized in the accounting period in which the

revenue is earned, regardless of when the associated revenue is received. (Recorded when the sale is

made, not when it is paid for.)


Depreciation - ANSWER✔✔-A method of allocating the cost of a tangible asset over its useful life.

Businesses depreciate long-term assets for both tax and accounting purposes.



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FIRST PUBLISH OCTOBER 2024




Straight-Line Deprecation - ANSWER✔✔-Straight Line Depreciation - (estimated value/useful life)


Equal amounts of depreciation expense are recorded in each period of the useful life of the asset, if not

disposed of prior to the end of estimated useful life.


The value is divided among estimated life of item.


Double Declining Balance Depreciation - ANSWER✔✔-Double Declining Balance


An "accelerated" depreciation method (more expense is recorded in the early periods of useful life and

less in the later periods.)


Basic Inventory Equation for Goods - ANSWER✔✔-Beginning Inventory + Purchases = Goods


Basic Inventory Equation for Cost of Goods Sold (COGS) - ANSWER✔✔-Goods Available for Sale - Ending

Inventory = Cost of Goods Sold (COGS)


Basic Inventory Equation for Ending Inventory - ANSWER✔✔-Beginning Inventory + Purchases = Goods

Available for Sale - Cost of Goods Sold (COGS) = ending inventory


Periodic Inventory Accounting - ANSWER✔✔-No transactions are recorded in the inventory account until

the end of the accounting period. Merchandise purchases are recorded in a purchases account.




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FIRST PUBLISH OCTOBER 2024




Inventory is counted and costed at the end of each accounting period. The inventory account beginning

balance is adjusted to physical inventory amount and the difference is added to or subtracted from

periodic Cost of Goods Sold.


Perpetual Inventory Accounting - ANSWER✔✔-Merchandise purchases are added to the inventory

account when the merchandise is received.




Cost of Goods Sold is computed and subtracted from the inventory account as sales are recorded.


FIFO (Inventory) - ANSWER✔✔-Inventory Oldest items inventory are sold first .(Example: Fruit)


LIFO (Inventory) - ANSWER✔✔-Most recent items added to inventory are sold first. (Example: Ore from

Mining)


Average Cost (Inventory) - ANSWER✔✔-Ending inventory units are costed using an average cost of goods

available divided by the units available for sale. (Example: Rope)


Specific Identification (Inventory) - ANSWER✔✔-Inventory items are tagged with their cost. (Example:

automobiles)


Generally Accepted Accounting Principles (GAAP) - ANSWER✔✔-A framework of accounting standards,

rules and procedures defined by the professional accounting industry, which has been adopted by nearly

all publicly traded U.S. companies.


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