2026-2027 WGU MBA|PA PREP FOR C213
Accounting for Decision Makers Exam Study
Guide & Answer Key Western Governors
University
1. What does accounting focus on?
a. The impact a business’s activities have on its overall financial performance
b. The impact a business’s activities have on its relationships with customers
c. The impact a business’s activities have on the environment
d. The impact a businesses’s activities have on its public image
2. Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time
a. Summary of cash receipts
b. Statement of cash flows
c. Cash flow schedule
d. Cash receipts and disbursements sheet
3. Which users would have a primary concern with an organization's ability to provide
healthcare benefits
a. Competitors
b. Vendors
c. Employees
d. Suppliers
4. Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAAP)
a. A decrease in its income tax obligations
, b. An increase in the amount of assets its reports
c. A decrease in the amount of net income it reports
d. An increase in its comparability to other companies
5. Which body regulates a certified public accounting firm’s audit practices when the firm is
auditing a large publicly traded company?
a. The Internal revenue service (IRS)
b. The public company accounting oversight board (PCAOB)
c. The financial accounting standards board (FASB)
d. Another certified public accounting (CPA) firm
6. What has had the most significant impact on accounting practices?
a. Certification requirements
b. Mobile computing
c. Information technology
d. New product innovations
7. Which two items of information are revealed on the balance sheet? Choose 2 answers:
a. Debt
b. Ownership
c. Costs
d. Expenses
e. Revenues
8. Which term is defineed as the residual interest in the net assets of a company?
a. Revenues
b. Operating income
, c. Owners’ equity
d. Liabilities
9. 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. $250 million
b. $350 million
c. $400 million
d. $450 million
Assets = Liabilities + Equity
x + 50m = 300m + 100m
Solving for x = 350m
10. Which situation should result in revenue recognition of the income statement for the year
ending 12/31/14 if the firm is using accrual-basis accounting
a. In 2014, a company collects cash from a customer for services it will provide next
year (2015)
b. In 2014, a company enters into a contract whereby it agrees to provide services
to a customer next year (2015)
c. In 2014, a company collcts cash frm a customer for services it provided in the
previous year (2013)
d. In 2014, a company provides to a customer for which cash will be collected
the next year (2015)
11. Which category on the statement of cash flows summarizes cash receipts and payments
to owners and creditors of the company?
a. Cash flows from business activities
b. Cash flows from financing activities
c. Cash flows from operating activities
d. Cash flows from investing activities
12. Where would an investor find a summary of a company’s significant accounting policies?
a. In a balance sheet
b. In the notes to financial statement
c. In the income statement
d. In the statement of cash flows
13. Which assurance does an external audit report provide for its readers?
a. The company will be a good credit risk
b. The company’s financial statement fairly reflect its financial position
c. The company will generate net income
d. The company will generate positive cash flows
14. Definitions:
a. Conservatism : Information related to recognizing losses as they occur
b. Relevant : Information having to do with the matter at hand
c. Reliable : Information that can be verified
d. Material : Information that is important enough to make a difference
15. Order the steps in the decision cycle frm the first (1) to last (5)
a. 1. Prepare financial statements
Accounting for Decision Makers Exam Study
Guide & Answer Key Western Governors
University
1. What does accounting focus on?
a. The impact a business’s activities have on its overall financial performance
b. The impact a business’s activities have on its relationships with customers
c. The impact a business’s activities have on the environment
d. The impact a businesses’s activities have on its public image
2. Which report summarizes cash collections and cash expenditures from operating,
investing, and financing activities over a period of time
a. Summary of cash receipts
b. Statement of cash flows
c. Cash flow schedule
d. Cash receipts and disbursements sheet
3. Which users would have a primary concern with an organization's ability to provide
healthcare benefits
a. Competitors
b. Vendors
c. Employees
d. Suppliers
4. Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAAP)
a. A decrease in its income tax obligations
, b. An increase in the amount of assets its reports
c. A decrease in the amount of net income it reports
d. An increase in its comparability to other companies
5. Which body regulates a certified public accounting firm’s audit practices when the firm is
auditing a large publicly traded company?
a. The Internal revenue service (IRS)
b. The public company accounting oversight board (PCAOB)
c. The financial accounting standards board (FASB)
d. Another certified public accounting (CPA) firm
6. What has had the most significant impact on accounting practices?
a. Certification requirements
b. Mobile computing
c. Information technology
d. New product innovations
7. Which two items of information are revealed on the balance sheet? Choose 2 answers:
a. Debt
b. Ownership
c. Costs
d. Expenses
e. Revenues
8. Which term is defineed as the residual interest in the net assets of a company?
a. Revenues
b. Operating income
, c. Owners’ equity
d. Liabilities
9. 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. $250 million
b. $350 million
c. $400 million
d. $450 million
Assets = Liabilities + Equity
x + 50m = 300m + 100m
Solving for x = 350m
10. Which situation should result in revenue recognition of the income statement for the year
ending 12/31/14 if the firm is using accrual-basis accounting
a. In 2014, a company collects cash from a customer for services it will provide next
year (2015)
b. In 2014, a company enters into a contract whereby it agrees to provide services
to a customer next year (2015)
c. In 2014, a company collcts cash frm a customer for services it provided in the
previous year (2013)
d. In 2014, a company provides to a customer for which cash will be collected
the next year (2015)
11. Which category on the statement of cash flows summarizes cash receipts and payments
to owners and creditors of the company?
a. Cash flows from business activities
b. Cash flows from financing activities
c. Cash flows from operating activities
d. Cash flows from investing activities
12. Where would an investor find a summary of a company’s significant accounting policies?
a. In a balance sheet
b. In the notes to financial statement
c. In the income statement
d. In the statement of cash flows
13. Which assurance does an external audit report provide for its readers?
a. The company will be a good credit risk
b. The company’s financial statement fairly reflect its financial position
c. The company will generate net income
d. The company will generate positive cash flows
14. Definitions:
a. Conservatism : Information related to recognizing losses as they occur
b. Relevant : Information having to do with the matter at hand
c. Reliable : Information that can be verified
d. Material : Information that is important enough to make a difference
15. Order the steps in the decision cycle frm the first (1) to last (5)
a. 1. Prepare financial statements
