WGU C201 BUSINESS ACUMEN
CHAPTER 15 & 16: ACCOUNTING AND
FINANCIAL STATEMENTS QUESTIONS
AND ANSWERS WITH COMPLETE
SOLUTIONS!!!
Financial Statement Overviews
Concept: Balance Sheet Answer: This serves as a financial "snapshot" or
permanent record. Unlike temporary accounts, these balances carry over into the
next fiscal year to provide a clear picture of a company's financial health on a
specific day. ✔️✔️
Concept: Income Statement Answer: Often compared to a "video" or motion
picture, this document tracks the movement of resources and operational
performance over a set timeframe. It is frequently referred to as a Profit and
Loss (P&L) statement. ✔️✔️
Concept: Statement of Owner’s Equity Answer: This report tracks fluctuations
in equity between two fiscal year-ends. It starts with the previous year's ending
equity, adds net profit to retained earnings, and subtracts dividend payments. It
also accounts for the sale of new shares or the buyback of existing stock to reach
the final ending balance. ✔️✔️
Statement of Cash Flows -ANSWER ✔️✔️Tracks the flow of cash generated and
spent over a period of time.
Including operation activities (day to day operations)
Financing activities (obtaining or paying for outside financing)
Investing activities (long term assets i.e. building and equipment).
Also includes depreciation recorded as a noncash expense.
Reducing the value of an asset over time.
, Public companies are required to prepare these.
Provide to creditors and investors with relevant information about cash receipts
and cash payments.
The only permanent financial statement. -ANSWER ✔️✔️Balance Sheet
This statement is used to show cash payment and cash receipts for day to day
operations. -ANSWER ✔️✔️Statement of Cash Flows
Information from balance sheet and income statement are used in this statement
to show the change in equity from one year to the next. -ANSWER
✔️✔️Statement of Owner's Equity
Potential buyers are interested in these two financial statements. -ANSWER
✔️✔️Balance sheet and statement of owners' equity
This statement summarizes financial performance in terms of revenues and costs
in a specific time period. -ANSWER ✔️✔️Income Statement
Which financial statement do we record depreciation on? -ANSWER
✔️✔️Statement of Cash Flows
Recorded as an expense.
Is depreciation a cash or non-cash expense? -ANSWER ✔️✔️Non cash
Accrual Accounting -ANSWER ✔️✔️Recognizing revenues and costs when they
occur not when the cash changes hand.
CHAPTER 15 & 16: ACCOUNTING AND
FINANCIAL STATEMENTS QUESTIONS
AND ANSWERS WITH COMPLETE
SOLUTIONS!!!
Financial Statement Overviews
Concept: Balance Sheet Answer: This serves as a financial "snapshot" or
permanent record. Unlike temporary accounts, these balances carry over into the
next fiscal year to provide a clear picture of a company's financial health on a
specific day. ✔️✔️
Concept: Income Statement Answer: Often compared to a "video" or motion
picture, this document tracks the movement of resources and operational
performance over a set timeframe. It is frequently referred to as a Profit and
Loss (P&L) statement. ✔️✔️
Concept: Statement of Owner’s Equity Answer: This report tracks fluctuations
in equity between two fiscal year-ends. It starts with the previous year's ending
equity, adds net profit to retained earnings, and subtracts dividend payments. It
also accounts for the sale of new shares or the buyback of existing stock to reach
the final ending balance. ✔️✔️
Statement of Cash Flows -ANSWER ✔️✔️Tracks the flow of cash generated and
spent over a period of time.
Including operation activities (day to day operations)
Financing activities (obtaining or paying for outside financing)
Investing activities (long term assets i.e. building and equipment).
Also includes depreciation recorded as a noncash expense.
Reducing the value of an asset over time.
, Public companies are required to prepare these.
Provide to creditors and investors with relevant information about cash receipts
and cash payments.
The only permanent financial statement. -ANSWER ✔️✔️Balance Sheet
This statement is used to show cash payment and cash receipts for day to day
operations. -ANSWER ✔️✔️Statement of Cash Flows
Information from balance sheet and income statement are used in this statement
to show the change in equity from one year to the next. -ANSWER
✔️✔️Statement of Owner's Equity
Potential buyers are interested in these two financial statements. -ANSWER
✔️✔️Balance sheet and statement of owners' equity
This statement summarizes financial performance in terms of revenues and costs
in a specific time period. -ANSWER ✔️✔️Income Statement
Which financial statement do we record depreciation on? -ANSWER
✔️✔️Statement of Cash Flows
Recorded as an expense.
Is depreciation a cash or non-cash expense? -ANSWER ✔️✔️Non cash
Accrual Accounting -ANSWER ✔️✔️Recognizing revenues and costs when they
occur not when the cash changes hand.
