WGU C213 PA & OA Full Practice Exam Q&A | Latest
Update 2026 | 100% Pass Guarantee | Exam Prep
1. Describe how period costs differ from product costs in manufacturing.
Period costs include direct materials, while product costs do not.
Period costs are expensed immediately, while product costs are
capitalized as inventory until sold.
Period costs are only incurred in service industries.
Period costs are always variable, while product costs are fixed.
2. If an internal auditor discovers discrepancies in financial reporting, what
should be their next course of action?
Report the findings to management and recommend corrective
actions.
Ignore the discrepancies if they are minor.
Conduct an external audit.
Prepare the financial statements themselves.
3. What is the primary assurance provided by an external audit report?
The financial statements are free from material misstatement.
The financial statements are prepared according to tax regulations.
The company will be profitable in the future.
The company has no outstanding debts.
4. If a company reports a net income on its income statement, what implications
does this have for its cash flow and overall financial health?
, It shows that the company is experiencing losses, which will likely
decrease its cash reserves.
It suggests that the company is generating more revenue than
expenses, which can positively impact cash flow and indicate
financial health.
It means the company is not investing enough in its operations,
leading to potential cash shortages.
It indicates that the company has high liabilities that may affect its cash
flow negatively.
5. The Summary of Significant Accounting Policies
is only required as part of a prospectus for the sale of new shares of
stock.
explains the important accounting choices the reporting entity uses
to account for selected transactions and accounts.
6. If the company does not make the proper adjusting entry to accrue payroll
expenses at year-end, what would be the impact?
Stockholders' equity will be understated.
Operating income will be overstated.
Liabilities will be overstated.
Assets will be understated.
7. Which of the following requires CPAs to provide reasonable assurance that
significant fraud or misstatement is NOT present in financial statements?
Generally Accepted Auditing Standards
Foreign Corrupt Practices Act
, Generally Accepted Accounting Principles
Sarbanes-Oxley Act
8. Describe why inventory is a key account for manufacturing companies but
not for service-oriented companies.
Inventory is only relevant for retail companies, not manufacturing or
service-oriented companies.
Both types of companies have inventory, but it is recorded differently.
Manufacturing companies hold inventory as they produce goods for
sale, while service-oriented companies do not have physical
products to inventory.
Service-oriented companies have inventory that is intangible.
9. If a company is preparing its financial statements, which external user group
would most likely analyze these statements to assess the company's financial
health?
Investors
Suppliers
Regulatory bodies
Internal auditors
10. Internal auditors serve many functions within a firm, but one thing they
cannot do is:
Help management improve organizational effectiveness and
efficiency
Assist in the design and implementation of an AIS that contributes to
the organization's goals.
, Evaluate the company's compliance with laws and regulations
Provide an independent review of the financial statements
11. The emphasis in financial accounting is to provide financial information to
which of the following user groups?
External auditors.
Management.
Investors and creditors.
Internal auditors.
12. The main purpose of management accounting is to
Help investors & creditors make decisions
Help managers make decisions
Project future transactions
Assess past performance
13. If an accounting firm provides consulting services to a company it audits,
what implications could this have under the Sarbanes-Oxley Act?
It would be permissible if disclosed to the SEC.
It could lead to a violation of independence requirements.
It would enhance the firm's credibility with the client.
It would not affect the audit opinion given by the firm.
14. If a company experiences a 20% increase in sales volume, how would you
expect its total variable costs to change, assuming the variable cost per unit
remains the same?
Update 2026 | 100% Pass Guarantee | Exam Prep
1. Describe how period costs differ from product costs in manufacturing.
Period costs include direct materials, while product costs do not.
Period costs are expensed immediately, while product costs are
capitalized as inventory until sold.
Period costs are only incurred in service industries.
Period costs are always variable, while product costs are fixed.
2. If an internal auditor discovers discrepancies in financial reporting, what
should be their next course of action?
Report the findings to management and recommend corrective
actions.
Ignore the discrepancies if they are minor.
Conduct an external audit.
Prepare the financial statements themselves.
3. What is the primary assurance provided by an external audit report?
The financial statements are free from material misstatement.
The financial statements are prepared according to tax regulations.
The company will be profitable in the future.
The company has no outstanding debts.
4. If a company reports a net income on its income statement, what implications
does this have for its cash flow and overall financial health?
, It shows that the company is experiencing losses, which will likely
decrease its cash reserves.
It suggests that the company is generating more revenue than
expenses, which can positively impact cash flow and indicate
financial health.
It means the company is not investing enough in its operations,
leading to potential cash shortages.
It indicates that the company has high liabilities that may affect its cash
flow negatively.
5. The Summary of Significant Accounting Policies
is only required as part of a prospectus for the sale of new shares of
stock.
explains the important accounting choices the reporting entity uses
to account for selected transactions and accounts.
6. If the company does not make the proper adjusting entry to accrue payroll
expenses at year-end, what would be the impact?
Stockholders' equity will be understated.
Operating income will be overstated.
Liabilities will be overstated.
Assets will be understated.
7. Which of the following requires CPAs to provide reasonable assurance that
significant fraud or misstatement is NOT present in financial statements?
Generally Accepted Auditing Standards
Foreign Corrupt Practices Act
, Generally Accepted Accounting Principles
Sarbanes-Oxley Act
8. Describe why inventory is a key account for manufacturing companies but
not for service-oriented companies.
Inventory is only relevant for retail companies, not manufacturing or
service-oriented companies.
Both types of companies have inventory, but it is recorded differently.
Manufacturing companies hold inventory as they produce goods for
sale, while service-oriented companies do not have physical
products to inventory.
Service-oriented companies have inventory that is intangible.
9. If a company is preparing its financial statements, which external user group
would most likely analyze these statements to assess the company's financial
health?
Investors
Suppliers
Regulatory bodies
Internal auditors
10. Internal auditors serve many functions within a firm, but one thing they
cannot do is:
Help management improve organizational effectiveness and
efficiency
Assist in the design and implementation of an AIS that contributes to
the organization's goals.
, Evaluate the company's compliance with laws and regulations
Provide an independent review of the financial statements
11. The emphasis in financial accounting is to provide financial information to
which of the following user groups?
External auditors.
Management.
Investors and creditors.
Internal auditors.
12. The main purpose of management accounting is to
Help investors & creditors make decisions
Help managers make decisions
Project future transactions
Assess past performance
13. If an accounting firm provides consulting services to a company it audits,
what implications could this have under the Sarbanes-Oxley Act?
It would be permissible if disclosed to the SEC.
It could lead to a violation of independence requirements.
It would enhance the firm's credibility with the client.
It would not affect the audit opinion given by the firm.
14. If a company experiences a 20% increase in sales volume, how would you
expect its total variable costs to change, assuming the variable cost per unit
remains the same?
