WGU D774 Introduction to Business Accounting
Questions and Answers | Study Guide | Grade A+
• Why are there no standardized regulations relating to the production of managerial
accounting information? -✓✓Company managers can generate any information they
want to help them make better decisions, so no outside regulation is needed.
• What is a common use of managerial accounting information? -✓✓Making better
planning, operating, and evaluating decisions inside a company
• Which report is one of the three primary financial statements? -✓✓Income statement
• Who performs external audits of financial statements? -✓✓Certified Public Accountant
(CPA)
• Who selects a corporation's board of directors? -✓✓Shareholders of the corporation
• What is an advantage of structuring a business as a corporation? -✓✓Legal existence
separated from that of the shareholders
• What is one of the characteristics of a corporation? -✓✓Ease of transfer of ownership
• What is contained in Securities and Exchange Commission Form 10-K? -✓✓Annual
audited financial statements
• Why would a company's employees be directly interested in the company's income
statement? -✓✓To assess the current profitability of the company, its performance, and
its liquidity
• Which information is contained in the reported amount of net income? -✓✓The
amount by which revenues exceed expenses
• Which measurement is highlighted in the multi-step format for the income statement?
-✓✓Operating income
• Which label refers to the costs of buying or making the products a company sells? -
✓✓Cost of sales
• Which item is listed first on the income statement? -✓✓Revenues
• Which item is reported in an income statement? -✓✓Revenues
, • In which situation does a company report revenue? -✓✓When products or services
are sold
• Which item should be reported as revenue in the income statement? -✓✓Amount
earned from customers for the sale of goods
• Alliah Company is preparing to do an initial public offering (IPO) of its shares next
year. Alliah knows that investors use a company's net income in their valuation models
to determine how much an IPO company's shares are worth. Alliah's founders are eager
for this IPO to do well so that their many years of work will be validated in the stock
market. Here are some data from Alliah Company's financial statements:Inventory
Accounts Payable
Expenses
Capital Stock (also called Paid-in Capital)
Accounts Receivable
Cash
Retained Earnings
Revenue
Building
Loans Payable
Which items are used to compute Alliah's net income? -✓✓Revenue and expenses
• The financial records for Freedom Rock Bicycles contain the following accounts.
Salary expense
Cash
Sales
Inventory
Income tax expense
Accounts receivable
Which items should be used to compute Freedom Rock's net income? -✓✓Sales,
salary expense, and income tax expense
• The amount of a company's assets and the amount of the company's liabilities are
known. Which computation should be performed to determine the company's owners'
equity amount according to the accounting equation? -✓✓Assets minus liabilities
• Alliah Company's financial records include these accounts at the end of the year.
Land
Accounts Receivable
Buildings
Inventory
Loans Payable
Accounts Payable
Retained Earnings
Capital Stock (also called Paid-in Capital)
Cash
Questions and Answers | Study Guide | Grade A+
• Why are there no standardized regulations relating to the production of managerial
accounting information? -✓✓Company managers can generate any information they
want to help them make better decisions, so no outside regulation is needed.
• What is a common use of managerial accounting information? -✓✓Making better
planning, operating, and evaluating decisions inside a company
• Which report is one of the three primary financial statements? -✓✓Income statement
• Who performs external audits of financial statements? -✓✓Certified Public Accountant
(CPA)
• Who selects a corporation's board of directors? -✓✓Shareholders of the corporation
• What is an advantage of structuring a business as a corporation? -✓✓Legal existence
separated from that of the shareholders
• What is one of the characteristics of a corporation? -✓✓Ease of transfer of ownership
• What is contained in Securities and Exchange Commission Form 10-K? -✓✓Annual
audited financial statements
• Why would a company's employees be directly interested in the company's income
statement? -✓✓To assess the current profitability of the company, its performance, and
its liquidity
• Which information is contained in the reported amount of net income? -✓✓The
amount by which revenues exceed expenses
• Which measurement is highlighted in the multi-step format for the income statement?
-✓✓Operating income
• Which label refers to the costs of buying or making the products a company sells? -
✓✓Cost of sales
• Which item is listed first on the income statement? -✓✓Revenues
• Which item is reported in an income statement? -✓✓Revenues
, • In which situation does a company report revenue? -✓✓When products or services
are sold
• Which item should be reported as revenue in the income statement? -✓✓Amount
earned from customers for the sale of goods
• Alliah Company is preparing to do an initial public offering (IPO) of its shares next
year. Alliah knows that investors use a company's net income in their valuation models
to determine how much an IPO company's shares are worth. Alliah's founders are eager
for this IPO to do well so that their many years of work will be validated in the stock
market. Here are some data from Alliah Company's financial statements:Inventory
Accounts Payable
Expenses
Capital Stock (also called Paid-in Capital)
Accounts Receivable
Cash
Retained Earnings
Revenue
Building
Loans Payable
Which items are used to compute Alliah's net income? -✓✓Revenue and expenses
• The financial records for Freedom Rock Bicycles contain the following accounts.
Salary expense
Cash
Sales
Inventory
Income tax expense
Accounts receivable
Which items should be used to compute Freedom Rock's net income? -✓✓Sales,
salary expense, and income tax expense
• The amount of a company's assets and the amount of the company's liabilities are
known. Which computation should be performed to determine the company's owners'
equity amount according to the accounting equation? -✓✓Assets minus liabilities
• Alliah Company's financial records include these accounts at the end of the year.
Land
Accounts Receivable
Buildings
Inventory
Loans Payable
Accounts Payable
Retained Earnings
Capital Stock (also called Paid-in Capital)
Cash
