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WGU C213 FINAL EXAM ACTUAL 2026/2027 | Accounting
for Decision Makers | Verified Answers | Pass Guaranteed -
A+ Graded
Section 1: The Accounting Cycle & Financial Statement
Preparation (Questions 1-14)
Q1. A corporation issues 5,000 shares of $2 par value common stock for $15 per
share. Which journal entry correctly records this transaction?
A. Debit Cash $75,000; Credit Common Stock $75,000
B. Debit Cash $75,000; Credit Common Stock $10,000 and Credit Paid-in Capital in
Excess of Par $65,000 [CORRECT]
C. Debit Common Stock $10,000 and Debit Paid-in Capital $65,000; Credit Cash
$75,000
D. Debit Cash $10,000; Credit Common Stock $10,000
Rationale: Common stock is recorded at par value ($2 × 5,000 = $10,000) with the
excess ($13 × 5,000 = $65,000) credited to Paid-in Capital in Excess of Par. Option A
ignores par value allocation, C reverses debits/credits, and D records only the par
amount. (Competency Unit 1: Transaction Analysis & Recording)
Correct Answer: B
Q2. A bookkeeper records a $4,500 cash payment for utilities by debiting Utilities
Expense for $4,500 and crediting Cash for $450. Which outcome results from this
error?
A. The trial balance will still be in balance
B. The trial balance will show total credits $4,050 less than total debits [CORRECT]
C. The trial balance will show total debits $4,050 less than total credits
D. The error will be detected automatically by the accounting software's posting
algorithm
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Rationale: A transposition error ($4,500 vs. $450) creates a $4,050 understatement of
credits, causing the trial balance to be out of balance by that amount. Option A is
incorrect because unequal amounts prevent balance; C reverses the direction; D is
false because software does not auto-correct human input errors. (Competency Unit 1:
Trial Balance & Error Detection)
Correct Answer: B
Q3. On December 1, a company pays $12,000 for a 12-month insurance policy. The
December 31 adjusting entry includes:
A. Debit Insurance Expense $12,000; Credit Prepaid Insurance $12,000
B. Debit Insurance Expense $1,000; Credit Prepaid Insurance $1,000 [CORRECT]
C. Debit Prepaid Insurance $11,000; Credit Insurance Expense $11,000
D. Debit Insurance Expense $11,000; Credit Prepaid Insurance $11,000
Rationale: One month of insurance has expired ($12,000 ÷ 12 = $1,000). The
adjusting entry recognizes the expired portion as expense and reduces the asset.
Option A records the entire amount, C reverses the logic for the remaining 11
months, and D records 11 months expired instead of 1. (Competency Unit 1: Adjusting
Entries)
Correct Answer: B
Q4. Employees earned $6,000 in wages for the final three days of December, payable
January 5. The December 31 adjusting entry is:
A. Debit Wages Payable $6,000; Credit Wages Expense $6,000
B. Debit Wages Expense $6,000; Credit Wages Payable $6,000 [CORRECT]
C. No entry is required until cash is paid
D. Debit Cash $6,000; Credit Wages Expense $6,000
Rationale: The matching principle requires recording wages expense in the period
incurred, with a corresponding liability for wages payable. Option A reverses the
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debit/credit, C reflects cash-basis error, and D incorrectly involves Cash before
payment. (Competency Unit 1: Accrual Accounting & Matching Principle)
Correct Answer: B
Q5. Equipment purchased for $55,000 has a $5,000 salvage value and a 5-year useful
life. Using straight-line depreciation, the annual depreciation expense is:
A. $11,000
B. $10,000 [CORRECT]
C. $12,000
D. $9,000
Rationale: Straight-line depreciation = (Cost − Salvage Value) ÷ Useful Life =
($55,000 − $5,000) ÷ 5 = $10,000. Option A omits salvage value, C uses incorrect
math, and D subtracts salvage twice. (Competency Unit 1: Adjusting Entries)
Correct Answer: B
Q6. A company receives $18,000 on October 1 for services to be performed evenly
over the next 6 months. The December 31 adjusting entry includes:
A. Debit Unearned Revenue $9,000; Credit Service Revenue $9,000 [CORRECT]
B. Debit Service Revenue $9,000; Credit Unearned Revenue $9,000
C. Debit Unearned Revenue $18,000; Credit Service Revenue $18,000
D. Debit Cash $9,000; Credit Service Revenue $9,000
Rationale: Three months have passed (Oct–Dec), so $9,000 ($18,000 × 3/6) has been
earned. The liability is reduced and revenue recognized. Option B reverses the entry,
C recognizes all revenue prematurely, and D incorrectly uses Cash. (Competency Unit
1: Revenue Recognition & Adjusting Entries)
Q7. Under GAAP, revenue is recognized when:
A. Cash is received from the customer
B. The performance obligation is satisfied and control of goods or services is
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transferred to the customer [CORRECT]
C. The sales invoice is generated and mailed
D. Production of the goods is completed
Rationale: The revenue recognition principle (ASC 606) requires recognition when
the entity satisfies performance obligations by transferring control. Option A
describes cash-basis accounting, C is a procedural step, and D violates the transfer-
of-control requirement. (Competency Unit 1: Revenue Recognition)
Correct Answer: B
Q8. The matching principle requires that expenses be recorded:
A. In the period cash is paid for the expense
B. In the same period as the revenues they help generate [CORRECT]
C. At the end of the fiscal year regardless of timing
D. Only when they exceed $500 in amount
Rationale: The matching principle (expense recognition) ties expenses to the period
in which related revenues are earned. Option A reflects cash basis, C ignores the
cause-and-effect relationship, and D introduces an arbitrary threshold. (Competency
Unit 1: Accrual Accounting Concepts)
Correct Answer: B
Q9. Which is the correct order of financial statement preparation under GAAP?
A. Balance sheet, Income statement, Statement of retained earnings, Statement of
cash flows
B. Income statement, Statement of retained earnings, Balance sheet, Statement of
cash flows [CORRECT]
C. Statement of cash flows, Income statement, Balance sheet, Statement of retained
earnings
WGU C213 FINAL EXAM ACTUAL 2026/2027 | Accounting
for Decision Makers | Verified Answers | Pass Guaranteed -
A+ Graded
Section 1: The Accounting Cycle & Financial Statement
Preparation (Questions 1-14)
Q1. A corporation issues 5,000 shares of $2 par value common stock for $15 per
share. Which journal entry correctly records this transaction?
A. Debit Cash $75,000; Credit Common Stock $75,000
B. Debit Cash $75,000; Credit Common Stock $10,000 and Credit Paid-in Capital in
Excess of Par $65,000 [CORRECT]
C. Debit Common Stock $10,000 and Debit Paid-in Capital $65,000; Credit Cash
$75,000
D. Debit Cash $10,000; Credit Common Stock $10,000
Rationale: Common stock is recorded at par value ($2 × 5,000 = $10,000) with the
excess ($13 × 5,000 = $65,000) credited to Paid-in Capital in Excess of Par. Option A
ignores par value allocation, C reverses debits/credits, and D records only the par
amount. (Competency Unit 1: Transaction Analysis & Recording)
Correct Answer: B
Q2. A bookkeeper records a $4,500 cash payment for utilities by debiting Utilities
Expense for $4,500 and crediting Cash for $450. Which outcome results from this
error?
A. The trial balance will still be in balance
B. The trial balance will show total credits $4,050 less than total debits [CORRECT]
C. The trial balance will show total debits $4,050 less than total credits
D. The error will be detected automatically by the accounting software's posting
algorithm
,2
Rationale: A transposition error ($4,500 vs. $450) creates a $4,050 understatement of
credits, causing the trial balance to be out of balance by that amount. Option A is
incorrect because unequal amounts prevent balance; C reverses the direction; D is
false because software does not auto-correct human input errors. (Competency Unit 1:
Trial Balance & Error Detection)
Correct Answer: B
Q3. On December 1, a company pays $12,000 for a 12-month insurance policy. The
December 31 adjusting entry includes:
A. Debit Insurance Expense $12,000; Credit Prepaid Insurance $12,000
B. Debit Insurance Expense $1,000; Credit Prepaid Insurance $1,000 [CORRECT]
C. Debit Prepaid Insurance $11,000; Credit Insurance Expense $11,000
D. Debit Insurance Expense $11,000; Credit Prepaid Insurance $11,000
Rationale: One month of insurance has expired ($12,000 ÷ 12 = $1,000). The
adjusting entry recognizes the expired portion as expense and reduces the asset.
Option A records the entire amount, C reverses the logic for the remaining 11
months, and D records 11 months expired instead of 1. (Competency Unit 1: Adjusting
Entries)
Correct Answer: B
Q4. Employees earned $6,000 in wages for the final three days of December, payable
January 5. The December 31 adjusting entry is:
A. Debit Wages Payable $6,000; Credit Wages Expense $6,000
B. Debit Wages Expense $6,000; Credit Wages Payable $6,000 [CORRECT]
C. No entry is required until cash is paid
D. Debit Cash $6,000; Credit Wages Expense $6,000
Rationale: The matching principle requires recording wages expense in the period
incurred, with a corresponding liability for wages payable. Option A reverses the
,3
debit/credit, C reflects cash-basis error, and D incorrectly involves Cash before
payment. (Competency Unit 1: Accrual Accounting & Matching Principle)
Correct Answer: B
Q5. Equipment purchased for $55,000 has a $5,000 salvage value and a 5-year useful
life. Using straight-line depreciation, the annual depreciation expense is:
A. $11,000
B. $10,000 [CORRECT]
C. $12,000
D. $9,000
Rationale: Straight-line depreciation = (Cost − Salvage Value) ÷ Useful Life =
($55,000 − $5,000) ÷ 5 = $10,000. Option A omits salvage value, C uses incorrect
math, and D subtracts salvage twice. (Competency Unit 1: Adjusting Entries)
Correct Answer: B
Q6. A company receives $18,000 on October 1 for services to be performed evenly
over the next 6 months. The December 31 adjusting entry includes:
A. Debit Unearned Revenue $9,000; Credit Service Revenue $9,000 [CORRECT]
B. Debit Service Revenue $9,000; Credit Unearned Revenue $9,000
C. Debit Unearned Revenue $18,000; Credit Service Revenue $18,000
D. Debit Cash $9,000; Credit Service Revenue $9,000
Rationale: Three months have passed (Oct–Dec), so $9,000 ($18,000 × 3/6) has been
earned. The liability is reduced and revenue recognized. Option B reverses the entry,
C recognizes all revenue prematurely, and D incorrectly uses Cash. (Competency Unit
1: Revenue Recognition & Adjusting Entries)
Q7. Under GAAP, revenue is recognized when:
A. Cash is received from the customer
B. The performance obligation is satisfied and control of goods or services is
, 4
transferred to the customer [CORRECT]
C. The sales invoice is generated and mailed
D. Production of the goods is completed
Rationale: The revenue recognition principle (ASC 606) requires recognition when
the entity satisfies performance obligations by transferring control. Option A
describes cash-basis accounting, C is a procedural step, and D violates the transfer-
of-control requirement. (Competency Unit 1: Revenue Recognition)
Correct Answer: B
Q8. The matching principle requires that expenses be recorded:
A. In the period cash is paid for the expense
B. In the same period as the revenues they help generate [CORRECT]
C. At the end of the fiscal year regardless of timing
D. Only when they exceed $500 in amount
Rationale: The matching principle (expense recognition) ties expenses to the period
in which related revenues are earned. Option A reflects cash basis, C ignores the
cause-and-effect relationship, and D introduces an arbitrary threshold. (Competency
Unit 1: Accrual Accounting Concepts)
Correct Answer: B
Q9. Which is the correct order of financial statement preparation under GAAP?
A. Balance sheet, Income statement, Statement of retained earnings, Statement of
cash flows
B. Income statement, Statement of retained earnings, Balance sheet, Statement of
cash flows [CORRECT]
C. Statement of cash flows, Income statement, Balance sheet, Statement of retained
earnings
