COURSE CODE: WGU C213 EXAM TIME
COURSE TITLE: Accounting for Decision Makers — Pre-Assessment DATE ALLOWED
Examination —/—/ 120
INSTRUCTOR: — —— Minutes
WGU C213 — Pre-Assessment
Examination
Accounting for Decision Makers — Complete Assessment: Financial Reporting, Cost Systems, CVP &
Budgeting
ALL QUESTIONS ARE COMPULSORY
A MULTIPLE CHOICE QUESTIONS (48 Marks)
Choose the single best answer for each question. Write the correct letter (A, B, C, or D) in the space provided.
1. What two items of information are revealed on the balance sheet?
A. Revenues and expenses.
B. Ownership and debt.
C. Cash inflows and outflows.
D. Net income and dividends.
✦ CORRECT ANSWER: B — Ownership (equity) and debt (liabilities).
The balance sheet reveals ownership (equity) and debt (liabilities), along with assets. Owners' equity is defined
as the residual interest in the net assets of a company. The fundamental equation is Assets = Liabilities +
Owners' Equity. The balance sheet reports financial position at a point in time.
, 2. Which term is defined as the residual interest in the net assets of a company?
A. Liabilities.
B. Owner's equity.
C. Current assets.
D. Long-term debt.
✦ CORRECT ANSWER: B — Owner's equity.
Owner's equity (also called stockholders' equity for corporations) is the residual interest in the assets of a
company after deducting liabilities. It represents the owners' claim on the business assets. The accounting
equation rearranges to: Assets − Liabilities = Owner's Equity.
3. A corporation has total liabilities of $300 million, total owners' equity of $100 million,
and current assets of $50 million. What is the value of the firm's long-term assets?
A. $350 million.
B. $400 million.
C. $250 million.
D. $150 million.
✦ CORRECT ANSWER: A — $350 million.
Total Assets = Liabilities + Owner's Equity = $300M + $100M = $400M. Long-term Assets = Total Assets − Current
Assets = $400M − $50M = $350M.
4. Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual-basis accounting?
A. In 2014, a company receives cash for services to be performed in 2015.
B. In 2014, a company provides services to a customer for which cash will be collected the next year
(2015).
C. In 2015, a company collects cash for services provided in 2014.
D. Revenue is recognised only when cash is collected.
✦ CORRECT ANSWER: B — In 2014, a company provides services to a customer for which cash will be
collected the next year (2015).
Under accrual accounting, revenue is recognised when (1) the promised work is done and (2) cash collection is
reasonably assured. Providing services in 2014 satisfies both criteria even though cash arrives in 2015.
COURSE TITLE: Accounting for Decision Makers — Pre-Assessment DATE ALLOWED
Examination —/—/ 120
INSTRUCTOR: — —— Minutes
WGU C213 — Pre-Assessment
Examination
Accounting for Decision Makers — Complete Assessment: Financial Reporting, Cost Systems, CVP &
Budgeting
ALL QUESTIONS ARE COMPULSORY
A MULTIPLE CHOICE QUESTIONS (48 Marks)
Choose the single best answer for each question. Write the correct letter (A, B, C, or D) in the space provided.
1. What two items of information are revealed on the balance sheet?
A. Revenues and expenses.
B. Ownership and debt.
C. Cash inflows and outflows.
D. Net income and dividends.
✦ CORRECT ANSWER: B — Ownership (equity) and debt (liabilities).
The balance sheet reveals ownership (equity) and debt (liabilities), along with assets. Owners' equity is defined
as the residual interest in the net assets of a company. The fundamental equation is Assets = Liabilities +
Owners' Equity. The balance sheet reports financial position at a point in time.
, 2. Which term is defined as the residual interest in the net assets of a company?
A. Liabilities.
B. Owner's equity.
C. Current assets.
D. Long-term debt.
✦ CORRECT ANSWER: B — Owner's equity.
Owner's equity (also called stockholders' equity for corporations) is the residual interest in the assets of a
company after deducting liabilities. It represents the owners' claim on the business assets. The accounting
equation rearranges to: Assets − Liabilities = Owner's Equity.
3. A corporation has total liabilities of $300 million, total owners' equity of $100 million,
and current assets of $50 million. What is the value of the firm's long-term assets?
A. $350 million.
B. $400 million.
C. $250 million.
D. $150 million.
✦ CORRECT ANSWER: A — $350 million.
Total Assets = Liabilities + Owner's Equity = $300M + $100M = $400M. Long-term Assets = Total Assets − Current
Assets = $400M − $50M = $350M.
4. Which situation should result in revenue recognition on the income statement for the
year ending 12/31/14 if the firm is using accrual-basis accounting?
A. In 2014, a company receives cash for services to be performed in 2015.
B. In 2014, a company provides services to a customer for which cash will be collected the next year
(2015).
C. In 2015, a company collects cash for services provided in 2014.
D. Revenue is recognised only when cash is collected.
✦ CORRECT ANSWER: B — In 2014, a company provides services to a customer for which cash will be
collected the next year (2015).
Under accrual accounting, revenue is recognised when (1) the promised work is done and (2) cash collection is
reasonably assured. Providing services in 2014 satisfies both criteria even though cash arrives in 2015.
